Buy NTPC; target of Rs 460: Sharekhan

Sharekhan's research report on NTPC

Q2FY25 standalone PAT was up 19.7% y-o-y to Rs. 4,649 crore with the regulated equity base growing 7.7% y-o-y to Rs. 89,430 crore. Consolidated PAT of Rs. 5,274 crore was up 14% y-o-y.NTPC plans to tender 13.6 GW of thermal capacities in the next 2-3 years apart from under-construction thermal capacities of 11.2 GW. Renewable energy capacity target remains strong at 20 GW by FY27 and 60GW by FY32.We believe that addition of thermal power capacities would drive regulated equity base and provides earnings growth visibility. Moreover, focus on ramping up of Renewable energy portfolio and its impending IPO (by Q3 end) could help unlock value.

Outlook

We maintain a Buy on NTPC with an unchanged PT of Rs. 460. Valuation of 2.2x/2x FY26E/FY27E P/BV are reasonable given strong long-term growth prospects, and the stock offers a decent dividend yield as well.