NTPC Q3: Brokerages remain optimistic despite muted quarter on cheap valuations, capex plans

Key factors to watch out for are an increase in peak deficit driving up PLFs and incentives for NTPC’s coal plants over FY26–27, said Nuvama.

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26 Aug, 2025 12:21

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Public-sector undertaking NTPC Ltd. reported a muted set of numbers for the three months ended December 2024. However, brokerages remained optimistic on the power player on its capacity expansion guidance and growth outlook.

NTPC's net profit saw a 3.1 percent increase for Q3, rising to Rs 4,711.4 crore, compared to Rs 4,571.9 crore in the same quarter last year. Revenue for the quarter also showed strong growth, up 4.8 percent to Rs 41,352.3 crore, compared to Rs 39,455 crore in the corresponding period of the previous year.

EBITDA (earnings before interest, tax, depreciation, and amortization) surged 20.3 percent to Rs 1,960.6 crore, up from Rs 9,941 crore in Q3 FY24. The company's EBITDA margin also improved significantly to 28.9 percent, up from 25.2 percent year-on-year.

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International brokerage Bernstein noted that as Q3 was a modest quarter, the guidance shared by the company leaves a steep target for the next two months. Projects have been delayed, while the demand for power is soft. However, the management is confident in further orders and rising interest in the inorganic route, specially with state generators.

However, at the stock's current metrics, it remains the best hedge across thermal and renewable energy players, with valuations below global peers'. The brokerage maintained its 'outperform' call, with a price target of Rs 440 per share.

While the profit was under estimates in Q3, the difference based on expectations for FY25 should be compensated in Q4, said Jefferies. The management sounded out that Q4 should see 2.7 GW thermal and 2.4 GW renewable energy commissioned, making the capacity ramp-up a key driver for rerating. Currently, the brokerage has a 'buy' rating, with a target price of Rs 500 per share.

Key factors to watch out for are an increase in peak deficit driving up PLFs and incentives for NTPC’s coal plants over FY26–27; on-time commissioning of planned thermal/RE capex and its resultant growth in profits, along with the rising contribution of subsidiaries/JV profits as intensity of growth shifts to consolidated profits by FY26, said Nuvama Institutional Equities.

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