State-run power major NTPC Ltd.'s shares rose on Monday, May 26, after the public sector player reported its in-line earnings for the January-March period for FY2025.
NTPC reported a 4 percent year-on-year (YoY) rise in its consolidated net profit at Rs 5,778 crore for the March quarter, compared to Rs 5,556.4 crore in the same period last year.
Revenue from operations grew 3.2 percent YoY to Rs 43,903.7 crore, while EBITDA came in slightly lower at Rs 11,255 crore, down 1 percent from Rs 11,340.6 crore. Operating margin contracted to 25.6 percent from 26.7 percent a year ago.
Over the next three years NTPC expects to see standalone capex to grow by around Rs 32,000 crore on average, the management said during an earnings call post the Q4FY25 results. On a standalone basis, the capex rose to Rs 22,965 crore from Rs 19,444 crore the previous year.
For FY2025, power major NTPC reported a group capex of Rs 44,636 crore in FY25, up from Rs 35,385 crore in FY24. NTPC Green Energy incurred a consolidated capex of Rs 12,914 crores, substantially higher than the Rs 8,996 crores spent in the previous year.
At 9.20 am, shares were quoting Rs 347.65, up 0.9 percent on the NSE, compared to the previous session's closing price.
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Should you buy, sell, or hold NTPC shares?
International brokerage Jefferies decided to reiterate its 'buy' rating, with a price target of Rs 490 per share. The brokerage noted the NPTC's EBITDA for the quarter was higher than expectations, as NTPC's renewable energy business achieved 90 percent margin.
Further, NTPC's fixed costs under recovery was Rs 460 crore, as compared to Rs 780 crore in FY24. The brokerage added that capacity ramp-up, along with medium-term double-digit EPS CAGR remain the key drivers for re-rating.
NTPC stays Nuvama Institutional Equities' top pick in the power utilities space on inexpensive valuation despite the brokerage estimating a seven percent EPS CAGR over FY25–27E, which will be driven by ~22GW thermal/hydro/renewable energy capex and potential of rising CERC incentives.
The broking house maintained its 'buy' call, but marginally trimmed its target price to Rs 404 per share, down from Rs 412 earlier.
Motilal Oswal maintained its neutral stance on the stock due to NTPC' sluggish installed capacity
expansion over FY25-27 at both the standalone and consolidated levels, ex-NTPC Green Energy (NGEL). Additionally, the brokerage believes that the valuation for NGEL, which accounts for ~17 percent of its SOTP valuation for NTPC, will remain under pressure amid execution challenges.
"In FY25, NGEL commissioned 1.9GW, significantly below its guided capacity growth of 3GW. Lastly, we believe the FY27E dividend yield of 2.7 percent remains modest and lower than peers such as Power Gride (FY27: 3.4 percent)," added Motilal Oswal.
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