Green energy capex powers 3.5% rally in NTPC stock to a 52-week high

Shares of NTPC are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 DMAs.

NTPC shares jumped 3.5 percent on Friday to hit a fresh 52-week high of Rs 247.75 on the NSE on September 29 after an 800-MW power plant went on stream. Prime Minister Narendra Modi will formally dedicate the Rs 6,000-crore unit at Ramagundam to the nation on October 1.

The rise in the PSU stock follows a 'buy' rating from ICICI Securities with a target price of Rs 300. In the past one year, the share price of NTPC has jumped nearly 53 percent. The stock has rallied over 45 percent so far this year, and analysts see further upside going forward.

A rally driven by green power

NTPC has set out on an aggressive renewable capacity addition plan with a projection to add 16,000 MW over FY24 to FY26, which will scale up its green power portfolio and lead to rerating of the stock, according to analysts at ICICI Securities.

"Based on the per-year addition of 4,000-5,000 MW of renewable capacity and strong growth in regulated equity in the conventional thermal portfolio, we estimate the EBITDA and the PAT to record 16.1 percent and 16 percent CAGR over FY23-25," the brokerage said.

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Coal remains the biggest growth engine

NTPC has added coal-based capacities over the last five years taking the total installed to 73,000 MW at the group level as of FY23. The power major has 9,300 MW of coal-based plants under construction which will go on stream by FY25-26.

ICICI Securities believes that this will lead to an 11 percent growth in output supported by strong PLFs (averaging above national level PLF) on thermal business and will help regulated equity growth at the average of 9 percent from Rs 77,628 crore in FY23 to Rs 99,000 crore by FY26.

With an aggressive approach to expand renewable energy, including green hydrogen, NTPC aims for nearly 45-50 percent of its capacity to come from non-fossil fuels by 2030, with the medium-term target of 60 GW of renewable capacity by 2032. The management is confident of reaching 20,000 MW of renewable capacity by FY26.

NTPC is also striving hard to diversify into areas like green hydrogen, Nuclear power (JV with NPCIL) and C&I. "We maintain our 'buy' rating on NTPC. We value the stock at Rs 300 per share (based on 1.8x FY25 Book Value)," said ICICI Securities in its report.

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NTPC stock technical indicators

In terms of technicals, the relative strength index (RSI) of NTPC stands at 57.8, implying that it's trading neither in the overbought nor in the oversold territory. The 1-year Beta of NTPC stands at 0.66, signalling very low volatility. Shares of NTPC are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages. NTPC's Price to Earnings Ratio is 13.2, lower than its sector PE ratio of 50.9, according to Trendlyne data.

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