Buy NTPC; target of Rs 300 Sharekhan

Sharekhan's research report on NTPC

NTPC plans to add 11.2 GW (apart from U/C capacity of 10 GW) of thermal power capacity beyond FY26 provides strong earnings growth visibility. A new thermal capacity addition amid rising peak power deficit could act as key re-rating catalyst as its valuations of 1.5x FY26E P/BV remain reasonable despite sharp run-up in the stock price. RE expansion plan of 20GW/60GW by FY26E/FY32E and focus on new areas of in green hydrogen/battery storage would diversify earnings, improve ESG ratings and could add significantly to earnings as well as investors’ returns going forward. Upcoming review of power tariff regulations would be keenly eyed although we do not see material change in regulated RoE of 15.5% for power gencos given MoP’s target to add 80 GW of thermal power capacities.

Outlook

We maintain a Buy on NTPC with a revised PT of Rs. 300 on strong earnings growth visibility, reasonable valuations and healssthy dividend yield of ~3-4%.