Shares of state-owned NTPC Ltd. are up nearly 5 per cent on Tuesday, reaching another record high. The stock is also the leading gainer on the Nifty 50 index.
Global brokerage firm Jefferies has upheld its 'Buy' rating on NTPC and raised its 12-month target price for the stock to ₹485 from the previous ₹445. This new target price suggests a potential increase of nearly 23 per cent from the stock's closing level on Monday.
Jefferies noted that NTPC's first-quarter profit exceeded expectations by 11 per cent. Although the fixed cost under-recovery was ₹200 crore, up from ₹100 crore year-on-year, this was offset by higher plant load factors (PLFs) for coal and gas.
In the June quarter, capacity addition was modest at 90 MW. The management has projected an addition of 23 GW from FY25 to FY27, primarily driven by renewables.
The brokerage firm notes that the increase in renewable energy capacity and pilot projects on green hydrogen continue to serve as catalysts for re-rating.
Meanwhile, brokerage firm Elara Securities has also upgraded the NTPC stock from ‘accumulate’ to ‘buy’ with a higher target price of ₹474 on better visibility on regulated returns. The brokerage firm sees an upside potential of up to 20 per cent.
“We revise our rating to Buy from Accumulate and raise our TP to INR 474 from INR 400 on better visibility on regulated returns and traction in RE initiatives based on 2.6x (from (from 2.0) P/B regulated equity FY27E P/B, 13x (unchanged) EV/EBITDA FY27E for renewable assets and 1.0x (unchanged) in cash & investment,” the brokerage firm said.
Elara believes that its regulated equity base will increase on 26GW addition of thermal capacity. An expanding RE pipeline and foray into new business verticals of green hydrogen & pumped hydro storage would drive growth. The stock is trading at 2.0x FY27E P/B, which seems attractive.
