SAPM-Assessment
Mini Project (Total Marks: 20)
You are required to prepare an analytical report on the given corporate stock, with the following
components:
1. Brief industry analysis (the industry to which the company belongs)-2 pages
A thermal power station is a power plant in which the prime mover is steam
driven. Water is heated, turns into steam and spins a steam turbine which either
drives an electrical generator or does some other work, like ship propulsion. After it
passes through the turbine, the steam is condensed in a condenser and recycled to
where it was heated; this is known as a Rankine cycle. The greatest variation in the
design of thermal power stations is due to the different fuel sources. Some prefer to
use the term energy center because such facilities convert forms of heat energy
into electrical energy
Introductory overview
Almost all coal, nuclear, geothermal, solar thermal electric, and waste incineration plants, as well
as many natural gas power plants are thermal. Natural gas is frequently combusted in gas
turbines as well as boilers. The waste heat from a gas turbine can be used to raise steam, in a
combined cycle plant that improves overall efficiency. Power plants burning coal, oil, or natural
gas are often referred to collectively as fossil-fuel power plants. Some biomass-fueled thermal
power plants have appeared also. Non-nuclear thermal power plants, particularly fossil-fueled
plants, which do not use cogeneration are sometimes referred to as conventional power plants.
Commercial electric utility power stations are most usually constructed on a very large scale and
designed for continuous operation. Electric power plants typically use three-phase or individual-
phase electrical generators to produce alternating current (AC) electric power at a frequency of
50 Hz or 60 Hz (hertz, which is an AC sine wave per second) depending on its location in the
world. Other large companies or institutions may have their own usually smaller power plants to
supply heating or electricity to their facilities, especially if heat or steam is created anyway for
other purposes. Shipboard steam-driven power plants have been used in various large ships in the
past, but these days are used most often in large naval ships. Such shipboard power plants are
general lower power capacity than full-size electric company plants, but otherwise have many
similarities except that typically the main steam turbines mechanically turn the propulsion
propellers, either through reduction gears or directly by the same shaft. The steam power plants
in such ships also provide steam to separate smaller turbines driving electric generators to supply
electricity in the ship. Shipboard steam power plants can be either conventional or nuclear; the
shipboard nuclear plants are mostly in the navy. There have been perhaps about a dozen turbo-
electric ships in which a steam-driven turbine drives an electric generator which powers an
electric motor for propulsion.
In some industrial, large institutional facilities, or other populated areas, there are combined heat
and power (CHP) plants, often called cogeneration plants, which produce both power and heat
for facility or district heating or industrial applications. AC electrical power can be stepped up to
very high voltages for long distance transmission with minimal loss of power. Steam and hot
water lose energy when piped over substantial distance, so carrying heat energy by steam or hot
water is often only worthwhile within a local area or facility, such as steam distribution for a ship
or industrial facility or hot water distribution in a local municipality.
History
Reciprocating steam engines have been used for mechanical power sources since the 18th
Century, with notable improvements being made by James Watt. The very first commercial
central electrical generating stations in New York and London, in 1882, also used reciprocating
steam engines. As generator sizes increased, eventually turbines took over.
2. Brief background of the company-2 pages
NTPC Limited (Formerly National Thermal Power Corporation) (NSE: NTPC) is the largest
state-owned power generating company in India. Forbes Global 2000 for 2009 ranked it 317th [3]
in the world. It is an Indian public sector company listed on the Bombay Stock Exchange
although at present the Government of India holds 84.5%(after divestment the stake by Indian
government on 19october2009) of its equity. With a current generating capacity of 31134 MW,
NTPC has embarked on plans to become a 75,000 MW company by 2017. It was founded on
November 7, 1975.
NTPC's core business is engineering, construction and operation of power generating plants and
providing consultancy to power utilities in India and abroad.
The total installed capacity of the company is 31134 MW (including JVs) with 15 coal based and
7 gas based stations, located across the country. In addition under JVs, 3 stations are coal based
& another station uses naphtha/LNG as fuel. By 2017, the power generation portfolio is expected
to have a diversified fuel mix with coal based capacity of around 53000 MW, 10000 MW
through gas, 9000 MW through Hydro generation, about 2000 MW from nuclear sources and
around 1000 MW from Renewable Energy Sources (RES). NTPC has adopted a multi-pronged
growth strategy which includes capacity addition through green field projects, expansion of
existing stations, joint ventures, subsidiaries and takeover of stations.
NTPC has been operating its plants at high efficiency levels. Although the company has 18.79%
of the total national capacity it contributes 28.60% of total power generation due to its focus on
high efficiency. NTPC’s share at 31 Mar 2001 of the total installed capacity of the country was
24.51% and it generated 29.68% of the power of the country in 2008-09. Every fourth home in
India is lit by NTPC. 170.88BU of electricity was produced by its stations in the financial year
2005-2006. The Net Profit after Tax on March 31, 2006 was INR 58,202 million. Net Profit after
Tax for the quarter ended June 30, 2006 was INR 15528 million, which is 18.65% more than for
the same quarter in the previous financial year. 2005).
Pursuant to a special resolution passed by the Shareholders at the Company’s Annual General
Meeting on September 23, 2005 and the approval of the Central Government under section 21 of
the Companies Act, 1956, the name of the Company "National Thermal Power Corporation
Limited" has been changed to "NTPC Limited" with effect from October 28, 2005. The primary
reason for this is the company's foray into hydro and nuclear based power generation along with
backward integration by coal mining.
• Products/business portfolio -2 pages
(1) Coal Based Power Stations
With 15 coal based power stations, NTPC is the largest thermal power generating company in the country.
The company has a coal based installed capacity of 25,375 MW.
COAL BASED(Owned COMMISSIONED
STATE
by NTPC) CAPACITY(MW)
1. Singrauli Uttar Pradesh 2,000
2. Korba Chhattisgarh 2,100
3. Ramagundam Andhra Pradesh 2,600
4. Farakka West Bengal 1,600
5. Vindhyachal Madhya Pradesh 3,260
6. Rihand Uttar Pradesh 2,000
7. Kahalgaon Bihar 2,340
8. NCTPP, Dadri Uttar Pradesh 1,820
9. Talcher Kaniha Orissa 3,000
10. Feroze Gandhi, Unchahar Uttar Pradesh 1,050
11. Talcher Thermal Orissa 460
12. Simhadri Andhra Pradesh 1,000
13. Tanda Uttar Pradesh 440
14. Badarpur Delhi 705
15. Sipat-II Chhattisgarh 1,000
Total 25,375
Coal Based Joint Ventures:
COAL BASED COMMISSIONED
STATE
(Owned by JVs) CAPACITY
1. Durgapur West Bengal 120
2. Rourkela Orissa 120
3. Bhilai Chhattisgarh 574
4. Kanti Bihar 110
Total 924
(2) Gas/Liquid Fuel Based Power Stations
The details of NTPC gas based power stations is as follows
GAS BASED
COMMISSIONED
STATE
CAPACITY(MW)
(Owned by NTPC)
1. Anta Rajasthan 413
2. Auraiya Uttar Pradesh 652
3. Kawas Gujarat 645
4. Dadri Uttar Pradesh 817
5. Jhanor-Gandhar Gujarat 648
6. Rajiv Gandhi CCPP Kayamkulam Kerala 350
7. Faridabad Haryana 430
Total 3,955
Gas Based Joint Ventures:
COAL BASED (Owned COMMISSIONED
STATE
by JVs) CAPACITY
1. RGPPL Maharashtra 1940
Total 1940
(3) Hydro Based Power Projects (Under
Implementation)
NTPC has increased thrust on hydro development for a balanced portfolio for long term sustainability. The
first step in this direction was taken by initiating investment in Koldam Hydro Electric Power Project located
on Satluj river in Bilaspur district of Himachal Pradesh. Two other hydro projects under construction are
Tapovan Vishnugad and Loharinag Pala. On all these projects construction activities are in full swing.
APPROVED
HYDRO BASED STATE
CAPACITY(MW)
1. Koldam (HEPP) Himachal Pradesh 800
2. Loharinag Pala (HEPP) Uttarakhand 600
3. Tapovan Vishnugad (HEPP) Uttarakhand 520
Total 1,920
• Market structure and competitive profile of the company (key factors) and future
prospects -3 pages
Power Generation
PresentlPresently, NTPC generates power from Coal and Gas. With an installed capacity
of 32,194 MW, NTPC is the largest power generating major in the country. It has
also diversified into hydro power, coal mining, power equipment manufacturing, oil &
gas exploration, power trading & distribution. With an increasing presence in the power
value chain, NTPC is well on its way to becoming an “Integrated Power Majory, NTPC
generates power from Coal and Gas. With an installed capacity of 32,194 MW, NTPC is
the largest power generating major in the country. It has also diversified into
hydro power, coal mi
ning, power equipment manufacturing, oil & gas exploration, power trading &
distribution. With an increasing presence in the power value chain, NTPC is well on its
way to becoming an “Integrated Power MajorPresently, NTPC generates power from
Coal and Gas. With an installed capacity of 32,194 MW, NTPC is the largest power
generating major in the country. It has also diversified into hydro power, coal
mining, power equipment manufacturing, oil & gas exploration, power trading &
distribution. With an increasing presence in the power value chain, NTPC is well on its
way to becoming an “Integrated Power Major.
3. Financial performance analysis
DATA 2007 DATA 2008
Return on
11.63 11.23
Equity
Book Value
59 66
Per Share
Earnings per
686.5 741.4
share
0.38 0.38
Dividends
payout ratio
12.30
CAGR
(Sales)
12.43
CAGR (Eps)
11.63 (1-0.38) 7.21 11.23 (1- 6.96
Sustainable ROE o.38)
Growth ratio
0.20 0.26
P/E ratio
DATA 2009 DATA 2010
Return on Equity 11.55 11.33
Book Value Per
71 77
Share
Earnings per
820.1 872.8
share
0.36 0.35
Dividends payout
ratio
11.55 (1-0.36) 7.39 11.33 (1- 7.36
Sustainable ROE
0.35)
Growth ratio
0.21 0.23
P/E ratio
• Analysis of recent trends (2006-07-2009-10) in financial performance (based on ratios
discussed in class)
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Projected financials for next 3-year period
Future Goals
The company has also set a serious goal of having 50000 MW of installed capacity by 2012 and
75000 MW by 2017. The company has taken many steps like step-up its recruitment, reviewing
feasibilities of various sites for project implementations etc. and has been quite successful till
date.
Future Capacity Additions
NTPC has formulated a long term Corporate Plan upto 2017. In line with the Corporate Plan, the capacity
addition under implementation stage is presented below:
PROJECT STATE MW
Coal
1. Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Haryana 1500
2 Korba III ( 1 x 500) Chhattisgarh 500
3 Sipat I (3 x 660) Chhattisgarh 1980
4. Farakka III ( 1 x 500) West Bengal 500
5. Simhadri II ( 2 x 500) Andhra Pradesh 1000
6. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu 1000
7. Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu 500
8. Bongaigaon(3 x 250) Assam 750
9. Mauda ( 2 x 500) Maharashta 1000
10. Rihand III(2X500) Uttar Pradesh 1000
11. Vindhyachal-IV (2X500) Madhya Pradesh 1000
12. Muzaffarpur Expansion (2x195) – JV with BSEB Bihar 390
13. Nabinagar TPP-JV with Railways (4 x 250) Bihar 1000
14. Barh II (2 X 660) Bihar 1320
15. Barh I (3 X 660) Bihar 1980
Hydro
1. Koldam HEPP ( 4 x 200) Himachal Pradesh 800
2. Loharinag Pala HEPP ( 4x 150) Uttarakhand 600
3. Tapovan Vishnugad HEPP (4 x 130) Uttarakhand 520
Total 17340
4. Valuation of the stock (use D/P ratio or P/E Ratio to calculate Ke)
5. Technical analysis-chart for period 2005-2010
One Year Technical Chart for NTPC Ltd.
6. Investment arguments and recommendations
Mention all names of references used-Books and websites used for data
collection