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Several domestic brokerages have maintained a buy or overweight rating on the NTPC stock despite muted September quarter earnings. Long-term investors betting on the stock could see up to 30 per cent upside over the next 12 months, they say.
Motilal Oswal Securities has the most aggressive 12-month target price of Rs 199 on the stock, which translates into a 31 per cent upside from Thursday’s closing price of Rs 151.65.
The public sector power producer reported a modest 4 per cent rise in revenue and 3 per cent increase in adjusted net profit. Most analysts were happy with the numbers reported for the second quarter of 2016-17.
One reason could be the fact that NTPC has reported excellent operational performance and its earnings before interest, tax, depreciation and amortisation (Ebitda) went up 14 per cent compared with the same period last year, an ET report said.
NTPC is expected to continue this solid operational performance in the coming quarters, analysts said. Increased domestic coal production by Coal India is one of the reasons for this and it has helped NTPC reduce coal imports drastically, the report pointed out.
By the beginning of 2017-18, NTPC is projected to work fully on domestic coal. Reduced use of imported coal will bring down the cost and, thereby, help it increase plant utilisation.
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