Wealth Creator-NTPC

Investment Logic

NTPC is the largest producer of power in the country.As everybody is aware there is a continous shortage of power in this country.So the company would never be in a situation of finding it difficult to sell its finished products for a long time to come.If the country continues to grow at 8% plus then the requirement of power is expected to continue to grow.The problem lies in the fact that tariffs are controlled.So the company will continue to make decent profits but will most probably will never make any bumper profits in its lifetime.So it will be steady grower just like the tortoise in the famous Rabbit-Tortoise story.

Fundamentals:
For the quarter ended June 06 the company recorded a turnover of over Rs.7000 crores and a net profit of Rs.1500 crores giving it a quarterly EPS of Rs.1.9.The current discounting or P/E (current Price-Rs.130) of 17 times is slightly on the higher side investors should look to pick up the stock on all declines.Dividend yield is 2.1%.Considering the major expansion the company is undertaking growth will certainly happen.Also the company is looking at backward integration through accquistion of coal mines etc.Also the company is aggresively looking at nuclear power to enhance its production.

A strong play on the India growth story and the power sector.