NTPC hits 52-week high

The rally in the share of the country's largest power generating company, National Thermal Power Corporation(NTPC), is expected to continue for the next few trading sessions as investors took cognisance of the company's long-term strengths, analysts said.

The company, which is a part of the 30-share Sensex, hit a 52-week high of Rs 163.55 on the Bombay Stock Exchange today.

The National Thermal Power Corporation is planning to increase its power generation capacity to 50,000 mw by 2012 and 75,000 mw by 2017 from just over 26,000 mw currently. It is expecting to add 3,160 mw of generating capacity in 2008.

"With such capacity expansion plans, there would be a sustainable return of 17-18 per cent," said a Mumbai-based analyst.

Despite being a laggard in the previous rally, analysts said NTPC was still an attractive bet thanks to the uncertainity surrounding other stocks.

Moreover, cash-rich company has proposed a capital expansion plan of Rs 12,790 crore for FY08.

In FY07, the capital expenditure was Rs 7,800 crore.

Analysts ruled out drastic changes in the price of the company's shares since power generation business has long gestation periods.

The stock can easily hit Rs 170, but it will not reach Rs 200 in a hurry," the analyst said.

Another factor pushing the shares of NTPC up is the planned initial public offerings (IPOs) of other power companies, which has led to a re-rating of NTPC. It has also increased visibility for the company, which was listed on the BSE in 2004.

The company's provisional net profit increased to Rs 6,726.40 crore in FY07 compared with Rs 5820.20 crore in FY06. Net sales last year rose 17.20 per cent to Rs 30,638.7 crore.