Stock Views on NTPC, TUBE INVESTMENTS OF INDIA

UBS on TUBE INVESTMENTS OF INDIA

UBS reiterates `Buy' rating on Tube Investments of India (TIL) with a price target of 197. TII reported PAT of Rs51.9 crore and a pre-exceptional PAT of 31.3 crore; led by strong revenue growth of 28% Yo-Y and EBITDA margin improvement of 40bps Q-o-Q to 11.5%. The cycles and engineering business, too, registered strong revenue growth of 25% and 28%, but margins were impacted by higher steel prices and declined 20-60 bps sequentially. However, the company remains confident about maintaining margins in future. The company plans to launch a new e-scooter model in Q4 with better features in the lower price scooter range with potentially higher demand. The company also has significant long-term expansion plans in its tubes, bicycles and chain businesses requiring an investment of 250 crore. The target price of 197 includes 106 for TIL's investments in Cholamandalam and Mitsui JV for general insurance at 50% holding company discount.

BNP PARIBAS on NTPC


NTPC's adjusted sales of 12,880 crore were 2.9% below the estimate, but this was on account of power generation coming in slightly below the estimate and lower-than-expected costs. The EPS beat was also aided by lower-than-expected depreciation and interest expenses and higher-than-expected other income. As markets have turned volatile, the stock has outperformed the MSCI India index by 8% over the past three months after a period of prolonged underperformance. In the long term, BNP thinks upside would only come if NTPC adds power-generation capacity on time and is able to rein in fuel costs by starting production from its captive coal mines. BNP's estimates are below consensus as they assume lower utilisation rates (70%) for NTPC's non-pithead plants on concern that NTPC's fuel costs would rise significantly as it imports more coal to overcome coal shortages due to inadequate supplies from Coal India