NTPC to buy govt.’s stake in THDCIL, NEEPCO for ₹11,500 crore

State-owned NTPC has agreed to acquire the government’s stake in THDC India Limited (THDCIL) and North-Eastern Electric Power Corporation Limited (NEEPCO) for ₹11,500 crore, a move that is seen as value accretive for the investors.

The company has inked sales purchase agreements (SPA) for acquiring government’s 74.496% in THDCIL for ₹7,500 crore and a100% acquisition of NEEPCO for ₹4,000 crore respectively.

According to the company, both the acquisitions are subject to satisfaction of customary conditions.

NEEPCO has an operational capacity of 1.5GW, with 600 MW under construction. THDC has 1.4GW under operation, with 1.44GW of power plant capacity under construction. The acquisition will add about 3GW of operational capacity to NTPC’s existing operational capacity of 58.5 GW.

THDC has 1.44 GW of under-construction capacity: Tehri PSP: 1,000 MW and Vishnugad HEP: 444MW which are expected to get commissioned by FY23-24.

“We believe that the acquisition at current consideration is value-accretive for NTPC. We continue to maintain our positive view on the stock in mainly due to attractive valuations. NTPC operates a regulated business model (with fixed RoE on invested project equity) and the current slowdown in demand due to the nationwide lockdown will not have much negative impact on its earnings. We maintain buy rating while keeping our TP unchanged at ₹146. Key risks include any delay in capacity additions and further subdued coal supplies,” said Emkay Global Financial Services in note to its clients.

NTPC shares on the BSE closed up 3.17% to ₹83.05 in a weak Mumbai market on Friday, valuing the company at ₹82,174.3 crore.

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Printable version | May 27, 2020 12:11:44 AM |

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