Nomura Financial Advisory and Securities has recommended 'Buy' on NTPC with target price of Rs 145 as against current market price (CMP) of Rs 166 in its report.

Commenting on the investment rationale, Nomura said, ''As per the latest available data from the Central Electricity Authority (CEA) - the tentative monthly generation report for May 2014 - NTPC's wholly owned coal-fired capacity utilization (PLF) stood at 84% in May (vs. 87% in April 2014 and 81% in May 2013).

Gas-fired capacity PLF at 36% dipped from 44%/43% in April 2014/May 2013 respectively. As per our calculations, PLF of NTPC's overall capacity (gas + coal) stood at 79% in May 2014 (vs. 82% in April 2014 and 76% in May 2013).
Notably, 6/16 coal-fired projects aggregating 12.8GW capacity operated at a PLF of >90% and 2/16 projects aggregating 3.8GW capacity operated at a PLF of 85-90%.

We are reviewing our estimates and TP for NTPC; at CMP, it stock trades at FY16F 1.4x P/B (BVPS of Rs 117.3) and 14.4x P/E (EPS of Rs 11.5).''

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