25-08-2017, 09:32 PM
NTPC CAPITAL STRUCTURE & DIVIDEND POLICY
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INTRODUCTION
India’s largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Apart from power generation, which is the mainstay of the company, NTPC has already ventured into consultancy, power trading, ash utilisation and coal mining. NTPC ranked 317th in the ‘2009, Forbes Global 2000’ ranking of the World’s biggest companies. NTPC became a Maharatna company in May, 2010, one of the only four companies to be awarded this status.
The total installed capacity of the company is 36,014 MW (including JVs) (as on 20th March 2012) with 15 coal based and 7 gas based stations, located across the country. In addition under JVs, 5 stations are coal based & another station uses naphtha/LNG as fuel. NTPC has a glorious record of excellence in every field of its activities ever since its inception in 1975. Leading the country’s power sector with a vision to become a 75,000 MW company by 2017, we take pride in our people and their performance which has been acknowledged time and again at various national and international fora. The company has set a target to have an installed power generating capacity of 128,000 MW by the year 2032. The capacity will have a diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. By 2032, non-fossil fuel based generation capacity shall make up nearly 28% of NTPC’s portfolio.
ANALYSIS OF CAPITAL STRUCTURE
In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as fresh issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed company in November 2004 with the Government holding 89.5% of the equity share capital. In February 2010, the Shareholding of Government of India was reduced from 89.5% to 84.5% through Follow on Public Offer. The rest is held by Institutional Investors and the Public.
Summary
The analysis shows that NTPC is an excellent investment for long term (10+ years) dividend based cash flow and capital appreciation.
Looking at the long term prospects of the company, the individual investors can initiate a starter position at this pricing. If pricing falls into the fair value range, the investor can add to this starter position.