NTPC reported a 7.9% year-over-year increase in net sales for the fourth quarter of fiscal year 2010, slightly ahead of estimates. Operating profit grew 1.9% year-over-year due to a 2.3% increase in sales volumes from commissioning new plants and higher plant load factors, though margins declined. Net profit declined 4.5% due to one-time provisions and lower interest rates. The analyst maintains an "Accumulate" rating and target price of Rs230, seeing continued growth from NTPC's regulated business model and expansion plans offset by potential project delays.

1. 4QFY2010 Result Update I Power
May 19, 2010
NTPC ACCUMULATE
CMP Rs201
Performance Highlights Target Price Rs230
NTPC’s net sales grew by 7.9% yoy to Rs12,353cr in 4QFY2010, which was Investment Period 12 Months
slightly ahead of our estimates. The Top-line growth during the quarter was
aided by a 2.3% yoy growth in volumes and increase in tariffs. The growth in Stock Info
volumes was on account of commissioning of 990MW during the year at
Sector Power
Dadri (490MW) and Kahalgoan (500MW) and higher PLF in gas based plants
due to better availability. The operating profit of the company grew by 1.9% Market Cap (Rs cr) 1,65,898
yoy to Rs3,044cr in 4QFY2010. The Bottom-line de-grew by 4.5% yoy on
account of one-off provisions and low interest rates. We maintain an Beta 0.6
Accumulate on the stock, with a Target Price of Rs230. 52 WK High / Low 242/187
One-off provisions, low Interest rates bring net profit down: NTPC’s net sales Avg. Daily Volume 897788
grew by 7.9% yoy to Rs12,353cr, aided by a growth in volumes and an Face Value (Rs) 10
increase in tariffs. The sales volume of the company stood at 55BU, up 2.3%
yoy. The growth in volumes was on account of commissioning of 990MW BSE Sensex 16,408
during the year at Dadri and Kahalgoan. On the operating front, the Nifty 4,920
company’s margins stood at 24.6%, down by 147bp yoy. The operating profit
for the quarter was up by 1.9% yoy to Rs3,044cr. The operating profit was Reuters Code NTPC@BO
affected by major portion of one-off provisions relating to a wage revision
Bloomberg Code NATP@IN
(Rs304cr), Deferred Tax Liability (Rs209cr) and additional incentives (Rs204cr)
corresponding to FY2010 charged during the quarter. The net profit de-grew Shareholding Pattern (%)
by 4.5% yoy to Rs2,018cr during 4QFY2010, on account of lower interest on
fixed deposits and a higher tax expense. Promoters 84.5
MF/Banks/Indian FIs 10.6
Outlook and Valuation
FII/NRIs/OCBs 2.6
At the CMP of Rs201, the stock is trading at a P/BV of 2.3x FY2011E and 2.1x Indian Public 2.3
FY2012E, and at an EV/MW of Rs4.55cr on FY2012E estimates. Considering
Abs. (%) 3m 1yr 3yr
its regulated business model, with an assured return on equity and strong
cash flow visibility, we have assigned an EV/MW of Rs5.25cr and a P/BV of Sensex 1.3 14.7 14.7
2.3x on FY2012E estimates, to arrive at a Target Price of Rs230. We maintain
an Accumulate rating on the stock. NTPC (0.3) (2.2) 29.2
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 44,245 48,256 52,812 62,152
% chg 14.5 9.1 9.4 17.7
Net Profit 8,092 8,838 9,703 11,591
% chg 8.3 9.2 9.8 19.5
OPM (%) 23.8 27.1 29.8 30.4
EPS (Rs) 9.8 10.7 11.8 14.1
P/E (x) 20.5 18.8 17.1 14.3 Rupesh Sankhe
P/BV (x) 2.8 2.6 2.3 2.1 Tel: 022 – 4040 3800 Ext: 319
RoE (%) 14.2 14.4 14.5 15.5 E-mail: rupeshd.sankhe@angeltrade.com
RoCE (%) 8.8 9.8 11.1 12.3
V Srinivasan
EV/Sales (x) 4.2 4.0 3.7 3.1
Tel: 022 – 4040 3800 Ext: 330
EV/EBITDA (x) 17.7 14.9 12.3 10.3
E-mail: v.srinivasan@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. NTPC I 4QFY2010 Result Update
Exhibit 1: 4QFY2010 Performance (Standalone)
Y/E March (Rs cr) 4QFY10 4QFY09 % chg FY10 FY09 % chg
Net Sales 12,353 11,446 7.9 46,323 41,924 10.5
Other Operating Income 378 769 (50.8) 1,899 2,176 (12.7)
Total Operating Income 12,732 12,214 4.2 48,221 44,099 9.3
Fuel Cost 8,346 8,016 4.1 29,463 27,111 8.7
(% of Sales) 68 70 64 65
Staff Costs 746 620 20.2 2,412 2,463 (2.1)
(% of Sales) 6 5 5 6
Other Expenses 596 590 1.1 2,027 1,952 3.8
(% of Sales) 5 5 4 5
Total Expenditure 9,688 9,226 5.0 33,902 31,526 7.5
Operating Profit 3,044 2,989 1.9 14,319 12,573 13.9
OPM 24.6 26.1 30.9 30.0
Interest 482 567 (15.0) 1,809 1,996 (9.4)
Depreciation 732 726 0.8 2,650 2,364 12.1
Other Income 250 267 (6.6) 1,025 1,147 (10.6)
PBT (excl. Extr. Items) 2,079 1,962 6.0 10,885 9,359 16.3
Extr. Income/(Expense) - -
PBT (incl. Extr. Items) 2,079 1,962 6.0 10,885 9,359 16.3
(% of Sales) 17 17 23 22
Provision for Taxation 62 (151) 2,157 1,158 86.3
(% of PBT) 3 (8) 20 12
Reported PAT 2,018 2,113 (4.5) 8,728 8,201 6.4
PATM 16 18 19 20
Source : Company, Angel Research
Operational Highlights
The company’s sales volume during the quarter stood at 55.0BU, up 2.3% yoy. The
generation was up on account of commissioning of new capacities during the year
and also high PLFs of gas-based plants. The PLF of the gas-based stations during
FY2010 stood at 78.38% (67.01%), up 1,137bp yoy. The gas supply to the company
increased by 29% during the year to 13.9mmscmd. The OPM of the company has
gone up by 147bp yoy to 24.6% during the quarter.
Exhibit 2: Generation, PLF (%) Trend
250 94
200 90
150 86
100 82
50 78
0 74
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
Generation (BU) PLF (%) - (RHS)
Source: Company, Angel Research
May 19, 2010 2

3. NTPC I 4QFY2010 Result Update
Augmenting Fuel Supply
NTPC has been augmenting its fuel supply through the following recent measures:
Coal
• Model Coal Supply Agreements with Coal India Ltd (CIL) for supply of coal to
NTPC stations for 20 years.
• Additional quantity of 7.35mmt received from CIL and SCCL for Farakka,
Kahalgaon and other projects. This includes a quantity of 0.55mmt through E-
Auction.
• Letter of Assurance (LOA) has been obtained for 15.1mmt of Eleventh Plan
coal-based projects and approval for LOA with total capacity of 5,960 MW
(projects covered under bulk tendering for 12th plan).
• Working on captive coal mines, with a target of 47mtpa by 2017, from the 6
blocks allotted.
• More than 6,735 acres of Land in Pakri Barwadih and about 1,594 acres of
land in the Chatti Bariatu coal block have been acquired, and land acquisition
for Dulanga and Talaipalli is in progress.
• Due diligence for the acquisition of stakes in two coal mines in Indonesia is
under progress and a consultant has been appointed for carrying out due
diligence for one coal block in Mozambique.
• International Coal Ventures Ltd (ICVL) has been incorporated on May 20,
2009 as a JV company of NTPC, RINL, SAIL, NMDC and CIL for sourcing
coking and thermal coal from overseas countries (like Australia, Mozambique,
Canada, Indonesia and the USA). ICVL is pursuing 3 thermal coal
opportunities in Indonesia, Australia and South Africa.
Gas
• Additional gas allocation of 4.46 mmscmd from KG-Basin by EGoM; out of
this, contracts are already in place for 1.81 MMSCMD.
• Long-term contracts for the supply of RLNG of 2.0 MMSCMD on firm basis
and 0.5 mmscmd on a fallback basis has been signed with GAIL for 10 years.
• Under NELP VIII, NTPC has been allotted one block at the Cambay basin as a
sole operator, and three blocks as a member of consortiums.
Exhibit 3: Fuel Receipt in Plants
FY10 FY09 % yoy
Coal (mmt)
Domestic 129.9 124.3 4.5
Import 6.3 5.4 16.7
136.2 129.7 5
Gas (mmscmd)
APM+PMT 9.08 8.68 4.6
Long Term/ Fall Back/ Spot LNG 4.45 2.07 116
KG-D6 0.35 0
13.9 10.8 29.1
Source: Company, Angel Research
May 19, 2010 3

4. NTPC I 4QFY2010 Result Update
Capacity Addition
During the quarter, 490MW of coal-based capacity at Dadri in Uttar Pradesh and
the 500MW unit at Kahalgoan were declared commercial. The company’s capacity
currently stands at 31,704MW (Incl. 2,864MW under JV), while the capacity under
construction is at 17,830MW. The management has guided that it would add
4,150MW and 6,500MW of capacity in FY2011E and FY2012E, respectively. On a
consolidated basis, the company plans to incur capex of Rs29,000cr during
FY2011E.
Exhibit 4: Capacities planned to be added in FY11
Projects MW
Sipat Stage-I, Unit-I 660
Jhajjar, Unit- I &2 1,000
Korba Stage–III, Unit -7 500
NCTPP Stage–II, Unit – 6 490
Simhadri, Stage–II, Unit- 3&4 1,000
Farakka, Stage-III, Unit 6 500
Total 4,150
Source: Company, Angel Research
Outlook and Valuation
India, despite being one of the lowest per capita consumers of power, has an overall
power deficit of 11%. The country’s demand for power, which has grown at a rate
of 6% since FY2003, has continued to outstrip supply. The escalation in power
demand is expected to be robust going ahead as well, in-line with the healthy GDP
growth estimated for the country. Apart from the demand arising from the Industrial
front, the domestic demand is also expected to pick up, with the Ministry of Power
(MoP)’s ambitious target of achieving a per capita consumption of 1,000 units by
2012.
NTPC, the market leader in power generation, has assets of 31,704MW, which
translates into a 20% market share of the overall domestic power industry, and
plans to become a 50,000MW and 75,000MW company by FY2012E and
FY2017E, respectively. The company has proposed to expand its capacity by
4,150MW and 6500MW, in FY2011E and FY2012E, respectively. Moreover, of the
22,430MW capacity that NTPC plans to add during the Eleventh Plan Period
(FY2007-12), it has till date managed to add only 4,300MW, while another
17,830MW is under construction. We believe that NTPC’s regulated business model
will provide it with high Revenue visibility, going forward. However, delays in the
completion of its projects would be a dampener.
At the CMP of Rs201, the stock is trading at a P/BV of 2.3x FY2011E and 2.1x
FY2012E, and at an EV/MW of Rs4.55cr on FY2012E estimates. Considering its
regulated business model, with an assured return on equity and strong cash flow
visibility, we have assigned an EV/MW of Rs5.25cr and a P/BV of 2.3x on FY2012E
estimates, to arrive at a Target Price of Rs230. We maintain an Accumulate rating
on the stock.
May 19, 2010 4

5. NTPC I 4QFY2010 Result Update
Exhibit 5: 1-year forward P/B band
260
3.0x
210
2.5x
Share Price (Rs)
160
2.0x
1.5x
110
60
Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
Exhibit 6: Premium/Discount in NTPC (P/E) to Sensex (P/E)
160
120
80
40
(
% 0
)
-40
-80
-120
-160
Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Apr-10
Prem/Disc to Sensex Historic Avg Premium
Source: Company, Angel Research
May 19, 2010 5

6. NTPC I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Gross sales 34,079 38,635 44,245 48,256 52,812 62,152
Less: Excise duty 204 - - - - -
Net Sales 33,876 38,635 44,245 48,256 52,812 62,152
Other operating income - - - - - -
Total operating income 33,876 38,635 44,245 48,256 52,812 62,152
% chg 22.8 14.0 14.5 9.1 9.4 17.7
Total Expenditure 23,764 27,222 33,702 35,182 37,089 43,275
Net Raw Materials 20,953 22,219 27,346 30,188 30,808 35,944
Other Mfg costs 861 3,050 3,823 2,471 3,905 4,596
Personnel 1,411 1,953 2,533 2,523 2,377 2,735
Other 538 - - - - -
EBITDA 10,112 11,413 10,544 13,075 15,723 18,877
% chg 30.0 12.9 (7.6) 24.0 20.3 20.1
(% of Net Sales) 29.9 29.5 23.8 27.1 29.8 30.4
Depreciation& Amortisation 2,100 2,206 2,495 2,894 3,201 3,995
EBIT 8,012 9,207 8,049 10,180 12,522 14,882
% chg 40.3 14.9 (12.6) 26.5 23.0 18.8
(% of Net Sales) 23.7 23.8 18.2 21.1 23.7 23.9
Interest & other Charges 2,010 1,858 2,143 2,078 2,531 3,004
Other Income 2,959 3,002 3,402 2,947 2,947 2,947
(% of PBT) - - - - - -
Share in profit of Associates - - - - - -
Recurring PBT 8,973 10,351 9,307 11,049 12,938 14,825
% chg - - - - - -
Extraordinary Expense/(Inc.) 11 - - - - 1
PBT (reported) 8,961 10,351 9,307 11,049 12,938 14,824
Tax 2,063 2,881 1,215 2,211 3,234 3,233
(% of PBT) 23.0 27.8 13.1 20.0 25.0 21.8
PAT (reported) 6,898 7,470 8,092 8,838 9,703 11,591
Add: Share of earnings of
- - - - - -
associate
Less: Minority interest (MI) - - - - - -
Prior period items - - - - - -
PAT after MI (reported) 6,898 7,470 8,092 8,838 9,703 11,591
ADJ. PAT 6,909 7,470 8,092 8,838 9,703 11,592
% chg 5.4 8.1 8.3 9.2 9.8 19.5
(% of Net Sales) 20.4 19.3 18.3 18.3 18.4 18.7
Basic EPS (Rs) 8.4 9.1 9.8 10.7 11.8 14.1
Fully Diluted EPS (Rs) 8.4 9.1 9.8 10.7 11.8 14.1
% chg 5.4 8.1 8.3 9.2 9.8 19.5
May 19, 2010 6

7. NTPC I 4QFY2010 Result Update
Balance Sheet (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 8,246 8,246 8,246 8,246 8,246 8,246
Preference Capital - - - - - -
Reserves& Surplus 41,124 45,991 51,706 54,382 62,676 70,346
Shareholders Funds 49,369 54,236 59,951 62,628 70,921 78,592
Minority Interest 48 124 166 279 - -
Total Loans 27,020 30,315 38,823 45,821 46,021 46,221
Deferred Tax Liability 0 0 0 230 0 (1)
Total Liabilities 76,437 84,675 98,940 108,958 116,943 124,812
APPLICATION OF FUNDS - - - - - -
Gross Block 51,093 55,648 64,742 70,242 80,018 88,788
Less: Acc. Depreciation 25,217 27,487 29,776 32,670 35,871 39,866
Net Block 25,877 28,161 34,966 37,572 44,147 48,922
Capital Work-in-Progress 20,286 25,630 30,929 38,915 33,608 37,291
Goodwill 2 - - - - -
Investments 15,143 13,447 11,696 11,778 14,653 14,352
Current Assets 26,604 26,346 33,486 33,215 38,085 41,197
Cash 13,698 15,361 17,251 16,053 17,964 17,518
Loans & Advances 8,902 5,031 9,006 12,681 13,878 16,333
Other 4,004 5,954 7,230 4,847 6,242 7,346
Current liabilities 11,475 8,908 12,137 12,908 13,787 14,678
Net Current Assets 15,129 17,438 21,349 20,307 24,535 24,248
Mis. Exp. not written off - - - 20 - (1)
Total Assets 76,437 84,675 98,940 108,958 116,943 124,812
Cash Flow Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 8,961 10,351 9,307 11,049 12,938 14,824
Depreciation 2,100 2,206 2,495 2,894 3,201 3,995
Change in Working Capital 1,813 2,063 1,367 (496) 2,468 2,718
Less: Other income 2,959 3,002 3,402 2,947 2,947 2,947
Direct taxes paid 2,063 2,881 1,215 2,211 3,234 3,233
Cash Flow from Operations 7,851 8,736 8,552 8,289 12,425 15,357
(Inc)/ Decin Fixed Assets (8,661) (9,896) (14,394) (13,486) (4,469) (12,454)
(Inc)/ Dec in Investments 3,449 1,696 1,751 (82) (2,875) 301
(Inc)/ Dec in loans and advances - - - - - -
Other income 2,959 3,002 3,402 2,947 2,947 2,947
Cash Flow from Investing (2,252) (5,198) (9,241) (10,621) (4,397) (9,206)
Issue of Equity - - - - - -
Inc./(Dec.) in loans 4,540 3,295 8,508 6,999 200 200
Dividend Paid (Incl. Tax) 3,038 3,313 3,786 3,786 3,786 3,793
Others 2,010 1,858 2,143 2,078 2,531 3,004
Cash Flow from Financing (508) (1,876) 2,578 1,134 (6,118) (6,597)
Inc./(Dec.) in Cash 5,091 1,662 1,890 (1,197) 1,911 (446)
Opening Cash balances 8,608 13,698 15,361 17,251 16,053 17,964
Closing Cash balances 13,698 15,361 17,251 16,053 17,964 17,518
May 19, 2010 7

8. NTPC I 4QFY2010 Result Update
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 24.0 22.2 20.5 18.8 17.1 14.3
P/CEPS 18.4 17.1 15.7 14.1 12.8 10.6
P/BV 3.4 3.1 2.8 2.6 2.3 2.1
Dividend yield (%) 1.8 2.0 2.3 2.3 2.3 2.3
EV/Sales 5.3 4.7 4.2 4.0 3.7 3.1
EV/EBITDA 17.7 15.8 17.7 14.9 12.3 10.3
EV / Total Assets 2.3 2.1 1.9 1.8 1.7 1.6
Per Share Data (Rs)
EPS (Basic) 8.4 9.1 9.8 10.7 11.8 14.1
EPS (fully diluted) 8.4 9.1 9.8 10.7 11.8 14.1
Cash EPS 10.9 11.7 12.8 14.2 15.6 18.9
DPS 3.7 4.0 4.6 4.6 4.6 4.6
Book Value 59.9 65.8 72.7 76.0 86.0 95.3
Dupont Analysis
EBIT margin 23.7 23.8 18.2 21.1 23.7 23.9
Tax retention ratio 77.0 72.2 86.9 80.0 75.0 78.2
Asset turnover (x) 0.6 0.6 0.6 0.6 0.6 0.6
ROIC (Post-tax) 10.2 10.1 9.3 9.3 9.8 11.3
Cost of Debt (Post Tax) 6.3 4.7 5.4 3.9 4.1 5.1
Leverage (x) 0.3 0.3 0.3 0.4 0.4 0.4
Operating ROE 11.3 11.6 10.5 11.6 12.3 13.6
Returns (%)
ROCE (Pre-tax) 11.1 11.4 8.8 9.8 11.1 12.3
Angel ROIC (Pre-tax) 19.0 21.5 17.1 19.6 21.1 22.0
ROE 14.6 14.4 14.2 14.4 14.5 15.5
Turnover ratios (x)
Asset Turnover (Gross Block) 0.7 0.7 0.7 0.7 0.7 0.7
Inventory / Sales (days) 27 26 26 27 27 26
Receivables (days) 13 22 29 22 14 14
Working capital cycle
13 17 25 32 37 39
(ex-cash) (days)
Solvency ratios (x)
Net debt to equity 0.3 0.3 0.4 0.5 0.4 0.4
Net debt to EBITDA 1.3 1.3 2.0 2.3 1.8 1.5
Interest Coverage (EBIT / Interest) 4.0 5.0 3.8 4.9 4.9 5.0
May 19, 2010 8

9. NTPC I 4QFY2010 Result Update
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement NTPC
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies’ Directors ownership of the stock No
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Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
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May 19, 2010 9