NTPC falls another 3% post CERC norms: How to trade it now?

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Shares of NTPC fell another 3 percent intraday to Rs 113.95 on Tuesday. The stock had already been battered in yesterday’s trade as it tanked 11.5 percent, hitting 7.7-year low on Central Electricity Regulatory Commission (CERC) final regulations for FY15-19 which provides no respite for it. The norms will fix tariffs for the power sector for the next five years.

So, how to trade it now?

Analysts expect the company's operational return on equity (RoE) to reduce to 18-19 percent from 23 percent earned in FY13. They feel bottomline may take a knock of Rs 1,100-1,350 crore.

SP Tulsian of sptulsian.com has a negative view on the stock and warns more downgrades are likely to come. He feels the stock may touch Rs 110 in short-term target but on the longer-term it may even touch Rs 100.

“Yesterday two crore shares have been delivered in the market taking combined delivery on BSE and NSE. Actually that is not the story but the position has shifted into the F&O. Yesterday about 26-28 lakh shares got rolled over but there has been a long position created of 1 crore 20 lakh shares in NSE in March series and this sign is a really bad,” he said in an interview to CNBC-TV18.

He says that earnings per share (EPS) was about Rs 13 and even if there is a downgrade of 10 percent in the earning, it will fall to a level of Rs 11 in FY15 maybe sub-10 in FY16.

However, Barclays is overweight on the stock with estimate potential negative impact of 5-6 percent on its consolidated earnings. The brokerage feels NTPC may see an impact of Rs 720 crore on profitability (more than 6 percent of consolidated FY15e PAT).

IIFL also advises to add the stock and estimates it to touch Rs 170. IIFL feels that the state-run company may need to seriously reconsider its investments in upcoming projects for which it has already signed power purchase agreement (PPA) on cost-plus basis. “To lower earnings impact, NTPC would need to strive hard to ramp up plant load factor (PLF) of the coal units either through speedy start-up of captive coal mines or ramp-up in low-cost coal imports RoE would trend at 10-11 percent,” it said.

At 10:31 hrs NTPC was quoting at Rs 114.20, down Rs 2.85, or 2.43 percent on the BSE.

Posted by Nasrin Sultana