Neutral NTPC; target of Rs 366: Motilal Oswal

Motilal Oswal's research report on NTPC

NTPC (standalone)’s reported 3QFY25 EBITDA came in 2% above our estimates, though adjusted PAT was below due to a higher-than-expected tax rate and previous year-related adjustments. Profitability at the PAT level was also hit by adverse movement in regulatory deferral account balances of INR3.6b. Gross generation was up 2% YoY in 3QFY25 while plant availability across both coal and gas plants improved on a YoY basis. Under-recovery in the coal-based plants stood at INR4.7b in 9MFY25 and is likely to decline to INR3b by the end of FY25. We believe that overall execution has remained slow. Also, the conventional capacity (thermal + hydro) commissioning targets have been downgraded to 2.1/2.2GW in FY25/FY26 (from the 2.7/4.0GW guidance given in the 9MFY24 earnings call).

Outlook

Our TP of INR366 for NTPC is based on: Value of INR226 for the standalone business at Dec’26E P/B of 2.2x.  Value of INR19 for other subsidiaries and INR51 for JV/associates at Dec’26E P/B of 2.0x. The stake in NGEL is valued at a 25% discount to the current market price.