NTPC shares rise 3% on Bernstein's 'outperform' call; 20% upside seen

NTPC shares have fallen 12 percent in the past month.

Shares of NTPC surged 3 percent to Rs 377 in morning trade on November 25, extending gains for the second consecutive trading session after Bernstein maintained an 'outperform' rating on the company and raised the target price.

With a target price of Rs 440, citing robust power demand, evening shortages, and the company’s cost-of-debt advantage as key drivers, the international brokerage forecasts a 20.5 percent upside from the current market levels.

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While analysts don’t see significant upside levers beyond these factors, they also don’t foresee a downside risk. NTPC shares are currently valued at 16x FY25 earnings and 10x EV/EBITDA, aligning with global peers.

Read more: BJP's clear win in Maharashtra may boost markets in near-term, but valuations a concern: Kotak Securities

Adding to NTPC’s prospects, its renewable energy arm, NTPC Green Energy, recently concluded a Rs 10,000 crore IPO. The issue, subscribed 2.42 times, saw strong demand from retail investors and qualified institutional buyers, with subscriptions of 3.44 times and 3.32 times, respectively. Proceeds from the IPO, amounting to Rs 7,500 crore, will be used to repay outstanding loans of NTPC Renewable Energy Ltd and for corporate purposes.

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Market experts highlight that the listing of NTPC Green Energy as a separate entity may introduce a holding company discount, potentially impacting NTPC’s current shareholders. NTPC Green Energy, a 'Maharatna' PSU, boasts a renewable portfolio of solar and wind power assets, underscoring NTPC's focus on green energy expansion.

At about 9:30 am, shares of the company were trading at Rs 373, higher by 2.5 percent from the last close on the NSE. Given the recent correction in the market, NTPC shares have fallen 12 percent in the past month.

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