Neyveli Lignite market-performer; tgt Rs 195: Karvy
“Neyveli Lignite stands to be a strong divestment candidate with 94% government holding, we continue to be positive on the stock. However, how and when the divestment scenario will be chalked out by government will remain crucial element to watch out. Nevertheless, in line with market and most of the peers, the stock should get re rated further. Currently, NLC is trading at 3.1x FY09, 3x FY10E and 2.7x FY11E BV and India’s largest power utility, NTPC is currently trading at 3.3x FY09, 3.1x FY10E and 2.8x FY11E BV at a price of Rs 231/share. Hence, we revise our target multiple for NLC from 2.5x to 3x on FY11BV and upgrade price target by 20% from Rs 162 to Rs 195. However, we downgrade our rating from Outperformer to Market performer, due to recent run up in the stock price,” says Karvy Stock Broking report.
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