NTPC: The Indian stock market buzzes with anticipation. NTPC, the national behemoth of power generation, has been on a steady ascent, leaving investors wondering. Can it finally breach the coveted 400 mark? This isn’t just about a number, it’s a potential tipping point for the company’s future and a test of investor confidence. Buckle up as we analyze the forces propelling NTPC’ rise, the challenges it faces, and the expert insights that could illuminate the path towards a brighter share price – quite literally reaching for 400 and beyond!
NTPC (National Thermal Power Corporation)
NTPC is a Public Sector Undertaking under the Ministry of Power, Government of India. It’s a major player in the Indian power sector. Established in 1975, they have played a critical role in the country’s economic development by ensuring reliable supply of electricity. Their core function relies on generating power, boasting a vast installed capacity across various sources.
Traditionally, thermal power plants fueled by coal have been their mainstay. However, recognising the growing importance of clean energy, NTPC is actively expanding its renewable energy portfolio, including solar and wind projects. They also manage a significant hydropower generation capacity, contributing to a more sustainable energy mix.
Beyond electricity generation, NTPC also undertakes consultancy and turnkey project contracts. Their expertise covers various aspects of power plant development including project management, engineering and operation maintenance.
Experts and Brokers opinion on NTPC’s future
JM Financials, the leading investment banking firm in India, have revised their target price on NTPC to Rs 414 from Rs 368 because of sustained growth in regulated equity, driven by the revival in margin-accretive thermal capex and gradual improvement in renewables execution.
International brokerage firm Jefferies reportedly raised its target price for NTPC shares to Rs 445 and reaffirmed its Buy rating on the company. With a revised target price of Rs 467 a share, Citi also kept its Buy position. This was because of strong Q4 earnings, improved earnings visibility due to thermal power generation and regulated ROE, and the execution ramp-up leading to strong earnings growth.
Even Sharekhan and ICICI securities have gone for a Buy call mentioning their target prices to be Rs 425 and Rs 495. ICICI securities expects the EBITDA of RE capacity to grow at a 30% CAGR for the next three years.
NTPC’s strong performance in FY 24
NTPC was able to see a sharp 25% rise in PAT to Rs 21,332 crore in FY 24 compared to Rs 17,121 crore in FY 23. NTPC’s share of accounted profits from subsidiaries and joint ventures increased significantly to Rs 5,533 crore in FY 24 from Rs. 2,246 crore in FY 23. NTPC group generated 422 billion units (BU) in FY 24, an increase of around 6% over 399 BU generated in FY 23.
NTPC’s captive coal production increased by 48% to 34.39 MMT from 23.2 MMT in FY 23. As a result of improved performance and valuation the company’s share price rose towards its all time high of 393.20.
| FY 2023 | FY2022 | FY 2021 | FY2020 | FY2019 | |
|---|---|---|---|---|---|
| Revenue ( in crore) | 1,76,206 | 1,32,669 | 1,11,531 | 1,09,464 | 1,00,286 |
| Net profit | 17,534 | 15,473 | 13,066 | 7,029.97 | 18,105 |
| ROE | 12.13% | 12.99% | 12.24% | 10.34% | 13.06% |
| TOTAL DEBT | 1,87,883 | 1,81,871 | 1,80,536 | 1,76,020 | 1,47,063 |
NTPC’s Aggressive Future Plans
Renewable Energy Segment
NTPC has set an ambitious target of achieving 60 GW of renewable energy capacity by FY 2031-32, up from the current 3.6 GW commissioned capacity.
Currently the company is able to produce 3.6 GW of renewable energy, 8.4 GW from construction, 11.2 GW from tendering process, 6.6 GW from equivalent land with connectivity tenders and 4.8 GW from equivalent land bank.
The company has made a strong visible pipeline of around 22-23 GW of renewable projects which includes 16 GW of solar and 6 GW of wind power projects.
In the near term, NTPC plans to commission 3 GW in FY 2024-25, followed by 5GW in FY 2025-26 and 8 GW in FY 2026-27. The company’s massive capacity addition plan is being pursued through a mix of strategies including participating in auctions, forming joint ventures with state utilities/ PSUs and tapping into the commercial & industrial (C&I) segment.
NGEL IPO
NTPC plans to unlock the value of its renewable energy business by listing its subsidiary NTPC Green Energy Limited (NGEL) through an IPO tentatively in October – November 2024. NGEL will remain a subsidiary of NTPC even after the IPO, and NTPC will retain majority of ownership.
The aim of this IPO is to raise equity capital to fund NGEL’s growth plans allowing public investors to participate in NTPC’s renewable energy growth.
Foray into Green Hydrogen
NTPC is actively exploring opportunities in the emerging green hydrogen sector through various pilot projects. This includes projects on green hydrogen mobility, setting up microgrids based on green hydrogen and tying up for exporting green ammonia. The company has signed MOUs with companies like Gujarat Pipavav Port Ltd for developing a green hydrogen ecosystem and exporting green ammonia.
Partnerships and Strategic Tie ups
NTPC is actively looking for partnerships and signing MOUs with state governments and companies for developing renewable energy projects, green chemicals, green hydrogen and pumped hydro storage projects. Some of the notable MOUs include those with the Gujarat State Petroleum Corp for green hydrogen blending, Government of Maharashtra for green hydrogen, pumped hydro and RE projects, Nepal Electricity Authority for joint power projects.
These partnerships are done to leverage synergies, access land banks and tap into growth opportunities across the clean energy value chain.
NTPC’s Capex plans
NTPC has guided for a consolidated annual capex of RS 35,000 – 50000 crore over the next 2-3 years at the group level. For FY 24-25 the company has set a standalone capex target of Rs 22,700 crore. The company has already undergone a cumulative expenditure of Rs 10,733 crore from the coal mine development till March 2024. NTPC has also secured foreign currency loans around 750 million euros through syndicated loan and Japanese yen worth 15 billion from JBIC loan to fund capex for FGD projects.
Other Growth Strategies of NTPC
NTPC plans to add 15.2 GW of new thermal power plant capacity in the near future, in addition to the 9.6 GW production which is already under construction. To enhance the fuel security for thermal, NTPC aims to ramp up its captive coal production to 50 million tonnes annually in the next 3 years from 34.39 MT in FY 24. The company is also focusing on reducing emissions from the FGD projects.
| Particulars | Amt | Particulars | Amt |
|---|---|---|---|
| CMP | 358 | Market Cap (Cr) | Rs 3,47,092 |
| Stock P.E | 16.6 | Industry P.E | 34.5 |
| ROE | 13.50% | ROCE | 10.40% |
| Debt-to-Equity | 1.48 | EPS | 21.5 |
Also read…
Conclusion
By looking at the overall performance, we can clearly see NTPC has strong fundamentals, visible growth prospects and initiatives to adapt to India’s energy transition. A target of Rs 400 share price could be achievable if NTPC is able to deliver on its plan seamlessly. However any discrepancies in execution or funding might limit the upside potential.
A target of Rs 400 looks ambitious for the near term, but NTPC’s long term prospects remain promising if it capitalizes the renewable energy opportunities. What would you say about the future projections, do let me know in the comments below.
Written by Pavunkumar V M
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.
The post Will NTPC cross ₹400 mark? Order Book and Financials Analyzed appeared first on Trade Brains.
