Sharekhan's research report on NTPC
Q4FY23 adjusted PAT grew by 7% y-o-y to Rs. 4,895 crore (2% above our estimates) led by a 10% y-o-y rise in regulated equity base, higher other income that was partially offset by higher interest/depreciation cost. Management guided for commercialisation of 4.5 GW/3.5 GW/2.4 GW of thermal power capacities in FY24E/FY25E/26E and 16 GW of RE capacities over the next three years. Strong commercialisation target to drive double-digit growth in regulated equity base and thus we expect NTPC to clock a 14% standalone PAT CAGR over FY23-25E. NTPC’s plan to monetise a minority stake in NTPC Green is on, though it could not materialise in FY23. The company is looking at either IPO route or a strategic sale for monetization. NTPC Green’s total equity is at ~Rs. 5,000 crore.
Outlook
We maintain a Buy on NTPC with an unchanged PT of Rs. 200, as it is attractively valued at 1.1x its FY25E P/BV, strong earnings visibility and healthy dividend yield of ~4%. Focus to ramp-up RE portfolio and new areas of green hydrogen/battery storage would be key growth catalyst over the medium to long term.
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