How were the NTPC results like on 03 November?

On Monday, India’s largest power company, NTPC reported its results. The numbers were nothing spectacular but better than the street expectations for sure. The company reported 7.53% growth in net profits at Rs.3,504 crore, largely driven by exceptional gain of Rs.550 crore.

The bigger announcement was that NTPC also announced that the board had approved the buyback of 19.8 crore shares of the company at a price of Rs.115. This will take the total size of the buyback to Rs.2275 crore, for which the company has sufficient cash reserves.

The government has been goading most of the cash rich PSUs to buy back shares and clearly NTPC is one of them. The idea is to help the government meet its disinvestment target of Rs.210,000 crore for the full fiscal year.

However, the buyback has also come in for some serious criticism. The buyback price has been fixed at a substantial premium to the market price of Rs.90. Most analysts are seeing this as a move by the government to transfer funds from the PSU coffers to the government coffers, not a very great idea when the government eventually wants solid valuations.