Equity | India | Electric Utility

Event Update
Details of the Issue
Price Band Issue Size Opening Date Closing Date Issue Type Face Value Listed On

NTPC Ltd.
Recommendation: SUBSCRIBE
Company Background
To be announced

February 06,2013

Rs 120 bn * February 7, 2013 February 7, 2013 Offer For Sale `10 BSE & NSE

NTPC, set up in 1975, is Indias largest power generation company with 39,674 MW installed capacity (including 4,364 MW from JVs). The company plans to add ~14GW of capacity in the XII plan. In addition to generation, it also provides consultancy services and has a subsidiary named, NTPC Vidyut Vyapar Nigam, is engaged in power trading. Apart from this, NTPC has also entered into JVs for different businesseswith Singareni Collieries for coal mining, BHEL for equipment manufacturing, and Transformers & Electricals Kerala (TELK) for repairs and maintenance.

(since govt. not declared OFS price, however govt. intends to collect Rs.120 bn* amount from this issue)

Investment Rationale
Ample of scope ahead with capacity increment With target capacity addition of around 7,700 MW in next 3 years, we expect a high growth period for NTPC in coming years as incremental power capacity to provide incremental earnings for the company. With better funds availability and declining concerns on receivables and introduction of fuel and power purchase adjustment mechanism, NTPC is thus better placed than other developers - both on the operational and the financial front. Capacity to subside the fuel risk NTPC has been able to receive 100% of ACQ (Annual Contracted Quantity) of coal against LoAs despite concerns of domestic availability and Coal Indias low growth in output. With Coal India increasing its output in addition to contribution from NTPCs captive mines starting from FY14, we believe that NTPC will be able to subside the risk of unavailability of fuel Worst over, improvement in hindsight NTPC has consistently reported PAF (Plant Availability Factor) of more than 90% against required 85%. We expect coal-based PAF to improve in FY14 and FY15 to around more than 92% from 88% in FY13 with increase in domestic coal production, contribution from captive coal mines and usage of imported coal as the inland waterways for coal transportation to Farakka and Kahalgaon stations get commissioned. Strong balance sheet NTPCs FY12 Numbers: Net debt/equity: 0.6x Interest coverage ratio: 7.14x NTPCs debt service coverage ratio at 3.21x

Objects of the Issue

Disinvestment by government of India (Promoter of NTPC) 9.5% Equity, being 783262880 shares Rs.120 bn*

Brokers on behalf of seller

Citigroup global (I) (P) Ltd. Dautsche Equities (I) (P) Ltd. Goldman Sachs(I)(P) Ltd. Kotak Securities Ltd. Morgan Stanley (I) (P) Ltd. SBI Cap Sec. Ltd.

Registrar
-

Shareholding Pattern
Pre-Issue Shares Promoters Public & Others Total Post-Issue Shares Promoters Public & Others Total 6,184,098,300 2,061,366,100 8,245,464,400 % 75.0 25.0 100.0 6,967,361,180 1,278,103,220 8,245,464,400 % 84.5 15.5 100.0

Valuation & Recommendation

At the CMP of `155, the stock is trading at 1.48x FY14 P/B. We believe that it is definitely the contender for higher valuation from present levels as more than 90% of its profitability is shielded due to regulated model. In addition to this there is huge confidence on NTPCs expansion plans as compared to private sectors, which is also aided by increasing clarity about availability of fuel. We expect the stock to trade at 1.75x FY14 P/BV, which we believe is justified given its regulated return profile which provides limited downside. Recommend Subscribe to the Offer for Sale.

Source: Institutional Research

Institutional Research

Equity | India | Electric Utility

NTPC Ltd.
NOTES

February 06,2013

GEPL CAPITAL Pvt Ltd Reg Office: D-21/22 Dhanraj mahal, CSM Marg, Colaba, Mumbai 400001

Disclaimer: This report has been prepared by GEPL Capital Private Limited ("GEPL Capital "). GEPL Capital is regulated by the Securities and Exchange Board of India. This report does not constitute a prospectus, offering circular or offering memorandum and is not an offer or invitation to buy or sell any securities, nor shall part, or all, of this presentation form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities. This report is for distribution only under such circumstances as may be permitted by applicable law. Nothing in this report constitutes a representation that any investment strategy, recommendation or any other content contained herein is suitable or appropriate to a recipients individual circumstances or otherwise constitutes a personal recommendation. All investments involve risks and investors should exercise prudence in making their investment decisions. The report should not be regarded by the recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this report are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of GEPL Capital as a result of using different assumptions and criteria. GEPL Capital is under no obligation to update or keep current the information contained herein. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative products and futures are not suitable for all investors, and trading in these instruments is considered risky. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument mentioned in this report. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily reflect GEPL Capitals internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions, by GEPL Capital or any other source may yield substantially different results. GEPL Capital makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. Further, GEPL Capital assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events, or otherwise. Neither GEPL Capital nor any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report. In no event shall GEPL capital be liable for any direct, special indirect or consequential damages, or any other damages of any kind, including but not limited to loss of use, loss of profits, or loss of data, whether in an action in contract, tort (including but not limited to negligence), or otherwise, arising out of or in any way connected with the use of this report or the materials contained in, or accessed through, this report. GEPL Capital and its affiliates and/or their officers, directors and employees may have similar or an opposite positions in any securities mentioned in this document (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). The disclosures contained in the reports produced by GEPL Capital shall be strictly governed by and construed in accordance with Indian law. GEPL Capital specifically prohibits the redistribution of this material in whole or in part without the written permission of GEPL Capital and GEPL Capital accepts no liability whatsoever for the actions of third parties in this regard.

Institutional Research| Event Update