In a few Moneycontrol Pro Profit Ideas, Jitendra Gupta of Moneycontrol.com spoke about a stock he is following closely, NTPC.
NTPC is a defensive player and is trading at an attractive valuation. Recently it has gone from around Rs 150 per share to around Rs 135 at present.
It is now trading seven times its estimated profit for fiscal 2023 and 0.9 times its book value. In addition, at current levels, it offers a dividend yield close to 5%. In addition to valuation, the fundamentals of the Crown corporation are also improving for the current quarter.
In the previous quarter ended September 2021, the company announced a 10.5% year-over-year increase in electricity production. This, along with the better performance of joint ventures and subsidiaries, enabled the company to post an increase of almost 17% in its consolidated turnover.
In addition, the company now has great visibility on profits. In fact, during the first half of the current fiscal year, the company has marketed nearly 2,160 megawatts of capacity, and it intends to install nearly 5,000 megawatts of thermal capacity and 1,100 megawatts of renewable capacity from by the end of fiscal year 2022.
The new addition of capacity and the higher demand will, of course, contribute to the growth in turnover. Profitability is expected to be even better thanks to lower taxes, surcharges and higher incentives, and in particular the contribution of subsidiaries and JVs.
Overall, it’s a good game from a profit and valuation standpoint.
Watch the accompanying video to learn more.
(Edited by : Bivekananda Biswas)