NTPC expected to report 7-8% net profits' growth in March 2014 quarter

NTPC is expected to report a 7-8% growth in net profits in March 2014 quarter on the back of higher depreciation and employee cost.

Despite capacity additions in FY14, NTPC's power generation has been subdued due to lack of demand from state Distribution Companies or Discoms. In the quarter ending march 2014, NTPC's generation is expected to increase by just 3-5%. On the other hand, its revenue is expected to increase by a healthy 21% due to tariff hike. however, given the increase in depreciation expense on account of commissioning of new projects, its profit growth is expected to be marginal this quarter.

NTPC's return on equity is expected to decline in the coming fiscal owing to the new CERC norms. The company has approached the courts for a review of the CERC norms. At current market price, the company's stock is trading at a Price-to-Book value of 1.2. The stock may be range bound until the clarity on new CERC norms are observed.