NTPC reported Q4FY19 replete with adjustments but broadly in line with our Ebitda estimate of `61 bn. Management expects capacity commercialisation of 5 GW at the group level (4.5 GW at Standalone) in FY20 (our estimate: 4 GW) to be spread over the year and not be backended. Having reined in fixed cost under-recovery to `8 bn in FY19 (down from `14 bn in FY18), management is confident it would further trend down in FY20 on the back of better coal supply management aided by a ramp-up in captive coal supply and imports.
We believe high power demand, commercialisation of capacity, recoupment of under-recoveries, etc would lift PAT CAGR to 16% over FY19–21e (flat over FY14–19). Working capital and coal availability are key variables. Maintain Buy with an SoTP-based TP of `158 (23% upside potential) as we roll forward the valuation to September 2020e.
