NTPC shares: Up 90% from 52-week low! Here's why Sharekhan sees over 30% upside potential

Shares of NTPC have recovered over 90 per cent from its 52-week low of Rs 166.65, hit on April 20, 2023. The PSU stock is up over 78 per cent in the last 12 months and also hit its 52-week high of Rs 360.35 on March 06, 2024.

Sharekhan, in its recent report, has maintained a 'Buy' rating on the PSU stock with a target price of Rs 425, signalling an upside potential of over 30 per cent. "NTPC is our top pick in the power sector given its strong earnings growth visibility, reasonable valuation of 2x FY26 P/BV considering discount versus private power companies and a healthy dividend yield of 3 per cent," it said.

"NTPC’s risk-averse regulated business model provides earnings growth visibility/RoE improvement and renewable energy (RE) capacity expansion would drive gradual re-rating of the stock as it would allay concerns on the ESG front. Additionally, a potential IPO for its RE business could further improve shareholders’ returns in the coming years," it added.

The brokerage firm expects this gap for NTPC (discount of 45 per cent versus private listed companies) to narrow down, given the favourable dynamics for its core thermal power business supported by rising peak power deficit, high growth for RE and a likely improvement in ESG score.

It also noted that India’s strong power demand, rising peak power deficit and the government’s focus on energy security would drive a revival in thermal power capex as thermal power will be key for reliable power supply as well as grid stability. "NTPC would be a key beneficiary of a revival in thermal power capex given its strong legacy in the segment," it said.

About NTPC

NTPC is India’s largest power utility with a total installed capacity of 75,418 MW (including JVs). The Group also plans to attain 60 GW of renewable energy capacity by 2032.

Currently, it has 3.4 GW of installed RE capacity and more than 22 GW under the pipeline.

NTPC posted a 7 per cent year-on-year growth in its consolidated net profit to Rs 5,209 crore in the third quarter against Rs 4,854 crore a year ago. On a sequential basis, net profit climbed 10 per cent from Rs 4,726 crore posted in the preceding September quarter.

Revenue from operations fell 4 per cent year-on-year to Rs 42,820 crore in the last quarter against Rs 44,602 crore in the corresponding period of last year

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.