Shares of a company engaged in the business of mining lignite and generation of power surged by nearly 1% on BSE to Rs. 282.15 in the trading session of Tuesday.
With a market capitalisation of Rs. 38,832.8 crores, at 10:38 a.m., the shares of NLC India Limited were trading in the green at Rs. 280, up by 0.2 percent, compared to its previous closing price of Rs. 279.5.
Brokerage Target:
International brokerage firm Elara Securities initiated a ‘buy’ rating on NLC India and assigned a target price of Rs. 373 per share, representing a potential upside of 33 percent from the current trading price of Rs. 280.
Brokerage Outlook:
Elara Securities projects that the expansion of regulated equity, supported by a robust project pipeline, will lead to revenue and net profit CAGRs of 15 percent and 20 percent, respectively, through FY24-27E.
The brokerage firm anticipates that the PSU company will achieve a revenue CAGR of 15 percent, an EBITDA CAGR of 20 percent, and a PAT CAGR of 20 percent over the same period (FY24-27).
Also read
Elara Securities has assigned a P/BV of 1.8x to NLC’s regulated thermal business, based on a 15 percent ROE, assuming the cost of equity at 10.5 percent and a growth of 5 percent.
The brokerage values the regulated thermal business and the regulated mining business both at 1.8x FY30E P/BV, discounted to FY27E.
The RE business is also valued at 10x FY27E EV/EBITDA, while the merchant coal business is valued at 4x FY27E EV/EBITDA.
However, Elara Securities highlights land acquisition challenges and the risk of delayed payments or defaults by distribution companies (DISCOMs) as significant risks.
Management Guidance:
NLC India currently has a consolidated generation capacity of 6 GW and plans to expand its total capacity to 20 GW by FY30. It also aims to increase its mining capacity from 50 MTPA to 104 MTPA. Presently, 1.4 GW of renewable energy (RE) plants are operational, with a goal to grow this to 10 GW by FY30.
In line with that target, NLC has initiated actions with around 2 GW of solar power projects already in the pipeline. In FY25, the company anticipates adding 300 MW from its Rajasthan Barsingsar solar power station.
Currently, the company has a total regulated equity of Rs. 9,529 crore, with Rs. 5,931 crore allocated to power generation and Rs. 3,598 crore to mining. The management plans to increase regulated equity to Rs. 18,885 crore by 2030.
Financials:
The company experienced marginal growth in its revenue from operations, showing a year-on-year rise of around 1.8 percent from Rs. 3,316 crores in Q1 FY24 to Rs. 3,376 crores in Q1 FY25.
Similarly, its net profit grew during the same period from Rs. 414 crores to Rs. 567 crores, indicating a rise of nearly 37 percent YoY. This rise in PAT is supported by an increase in lignite production, coal production, and power production.
On a year-on-year basis, the Earnings Before Interest, Taxes, Depreciation, and Amortisation, or EBITDA increased from Rs. 1,028.5 crores in Q1 FY23 to Rs. 1,221.8 crores in Q1 FY25, registering a growth of 18.8 percent.
Stock Performance:
The shares of NLC India delivered multibagger returns of nearly 116.5 percent in one year and around 12 percent of positive returns year-to-date.
About the company:
NLC India Limited is a ‘Navratna’ Government of India (GoI) enterprise under the Ministry of Coal and is engaged in the business of mining of lignite & coal and generation of power by using lignite as well as renewable energy sources and consultancy.
The company has three key business segments: Mining (lignite and coal) operations, Power Generation (thermal, solar and wind) and Power Trading.
Written by Shivani Singh
Also read
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
