NTPC stock soars 5%, market-cap crosses Rs 4 trillion; here's why

At 10:03 am; with Rs 3.96 trillion market cap NTPC stock was trading 3.6 per cent higher at Rs 408 on the BSE.

State-owned power generation company NTPC’s market capitalisation (market cap) crossed the Rs 4 trillion mark for the first-time even on the BSE in Thursday’s intra-day trade. The stock rallied 5 per cent to Rs 412.60, hitting a new high in an otherwise range-bound market.

At 10:03 am; with Rs 3.96 trillion market cap NTPC was trading 3.6 per cent higher at Rs 408. In comparison, the BSE Sensex was up 0.04 per cent at 81,389.

In the past one year, NTPC, India’s largest power generating entity, has outperformed the market by surging nearly 90 per cent on strong demand outlook, as against 22 per cent surge in the benchmark index.

The total installed capacity of the NTPC Group was 76,048 MW (including  JVs/subsidiaries) as on June 30, 2024.  NTPC has been accorded the status of a Maharatna, which gives it considerable operating flexibility. While continuing its core business of coal and  gas-based  thermal  generation,  the  company  has  diversified  (in  some  cases  through  JVs)  into  related  activities  like consulting, hydropower development, power trading, coal mining, and renewable projects (like wind and solar).

NTPC expects electricity requirement in India to grow in tandem with the GDP growth. Both peak load demand and energy requirement are expected to rise at a healthy pace, the company said.

India’s GDP is expected to grow significantly on the back of our demographic strength and India becoming a Manufacturing Hub. India has low per capita consumption of electricity which is expected to rise to 3,000 kWh by 2040.

NPTC’s management has guided for capacity addition of 26GW by FY32, out of which 9.5GW is under construction, 8GW is under tendering (Tender-01: 1x800 MW NTPC Sipta-III, 1x800 MW NTPC Darlipali-II; Tender-02: 3x800 MW NTPC Meja-II, Tender-03: 3x660 MW NTPC Nabinagar TPS, 2x800MW Gadarwara St-II, 3x800 MW NTPC Telangana Ph-II) and 8.5GW is soon to be tendered. The company is confident of ordering all the projects within he next 1 month.

The management believes that it has a first-mover advantage in the new thermal capex cycle which will help them commission the projects early vs. the State GenCos’ projects. It expects to commission 2.0-2.5GW of thermal power capacity in the next 4 quarters and 7GW in 3 years. Additionally, two units of 4x250MW of Tehri pumped hydro storage (a 74.496% subsidiary of NTPC) are expected to be commissioned within a fortnight, analysts at JM Financial Institutional Securities said.

Given the revival in margin-accretive thermal capex (26GW capacity addition by FY32) and momentum in new growth areas viz. nuclear power (allotted 2.8GW) and coal mining (86MTPA capacity) , the brokerage firm maintains a 'BUY' rating on the stock with a revised target price of Rs 451 valuing at 3xFY26E Regulated Equity of thermal business and 12x FY26E EBITDA of RE business.

Strong presence in the thermal power capacity and strong scale up in the renewable space makes NTPC as our top pick in the utility space, ICICI Securities said in a note.

Aggressive foray into the renewable space and other green energy avenues will keep NTPC in a sweet spot. Going ahead the brokerage firm believes monetisation of the green renewable subsidiary and strong capacity addition trajectory will drive good financial performance for the company in the medium to long run.