Positive on NTPC: Rupesh Sankhe, Angel Broking

Rupesh Sankhe, Research Analyst, Angel Broking, in a chat with ET Now talks about NTPC and other power stocks.

What is your take on NTPC and the power sector?

If you look at the current play, merchant rate is close to Rs 3-3.5. So most of the private players like JSW Energy and Adani Power are betting on merchant rates. Their cost of generation is close to Rs 2.5-3. They used to generate ROE close to 55-60% which will come down to 25-30% in the longer term given the high risks in terms of fuel linkages.

So we are currently positive on regulated entities like NTPC. If you look at the valuation of NTPC, it is currently available at close to 1.9 times price to book value based on FY12 estimates and we have assigned 2.3 price to book value and close to 5.25 enterprise value per megawatt basis.

So our target price for NPTC is Rs 230 and we are positive on NTPC.