NTPC, India's largest power generation company, achieved a historic high in today's trading session, with its shares reaching ₹247.8 each, jumping 4.55% in value. This impressive surge is part of a year-long bullish trend for NTPC, when its shares have demonstrated a remarkable 53.18% return, rising from ₹159.55 apiece to the current level of ₹244.40.
Looking ahead, NTPC's positive momentum is poised to continue, as per the projections made by domestic brokerage firm ICICI Direct Research. The brokerage highlights NTPC's aggressive approach to expanding renewable energy, which will make it one of the largest players in the Indian renewable space.
NTPC is India’s largest power generation company, with a total installed capacity of 73,000 MW at the group level as of FY23. It has 17% of the total installed capacity in India, with a 24% generation share. The company’s vision is to become a 130 GW+ company by 2032, of which 60 GW would be contributed by renewable energy.
The company has been the only company which has added coal-based capacities over the last 5 years and reached an installed base of 73,000 MW on a consolidated basis. Going ahead, NTPC is having 9300 MW of coal-based plants under construction, which will be commissioned by FY25–26, said ICICI Direct.
The brokerage firm anticipates that this expansion will drive an 11% growth in electricity generation supported by strong PLFs (averaging above national level PLFs) on thermal business and will help regulate equity growth at a CAGR of 9% from ₹77,628 crore in FY23 to ₹99,000 crore by FY26E.
Notably, NTPC is among the few industry players that have already committed capital for pollution control equipment, specifically for reducing sulphur oxide (Sox) and nitrogen oxide (Nox) emissions. The company is set to implement flue gas desulfurization (FDG) systems across 60,000 MW of its coal-based capacity, with an estimated investment of ₹30,000 crore.
Beyond these projects, NTPC has ambitious plans to add brownfield coal-based capacity totaling 7,000 MW. These projects will be phased in by 2030, with the procurement process commencing in FY25.
The combination of ongoing and upcoming projects positions NTPC to further expand its market share in the coal-based power plant segment, which presently stands at 17% as of FY23, according to the brokerage.
The company is also aggressively expanding into renewable energy, including green hydrogen. It aims for nearly 45–50% of its capacity to come from non-fossil fuels by 2030, with a medium-term target of 60 GW of renewable capacity by 2032.
Currently, the company has 3300 MW of installed renewable capacity and 5900 MW of projects under construction, and 11000 MW of projects in the pipeline, the brokerage noted.
With a capacity addition plan of 16000 MW over FY24-FY26E, the brokerage believes NTPC will be capitalised assets to the tune of ₹85,000-90000 crore and take the cumulative renewable capacity to 20000 MW by FY26E from 3300 MW in FY23, thereby making it one of the largest players in the Indian renewable space.
Given the company's robust operational performance in terms of capacity addition and higher than national PLF's, the brokerage estimates NTPC’s PAT to grow at a CAGR of 16% over FY23–25E. It expects NTPC to report a PAT of ₹20,369 crore and ₹23,097 crore in FY24E and FY25E, respectively.
Considering these factors, the brokerage maintains its 'buy' recommendation on the stock, with a target price of ₹300 apiece, reflecting a potential upside of nearly 23% from its previous closing price.
20 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.
