The government is coming out with an Offer For Sale (OFS) of 78.3cr equity
shares of NTPC. The OFS is expected to raise close to Rs11,350cr at the floor price
of Rs145/share. After this OFS, the governments stake in the company would
come down from 84.5% to 75%. The OFS will be held on February 07, 2013. We expect NTPC to register a CAGR of 12.3% and 8.5%
in its top-line and bottom-line over FY2012-14E, respectively. At the offer price
(which is at a 4.6% discount to the price as on February 06, 2013), the stock
would trade at 1.3x FY2014E P/BV. Given the attractive valuation (stock trading at
1.3x FY2014E P/BV compared to its three year trading range of 1.5x to 2.3x and
median of 1.8x), we recommend Subscribe on the issue. We have assigned a
multiple of 1.5x to arrive at a target price of Rs163.

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