Shares of NTPC rose 5% to hit an intraday of Rs 196.60 on NSE today. After today's surge, the stock is trading near its 15-year high of Rs 242.50 level hit in 2008. The buying interest in the stock occurred after the global brokerage Goldman Sachs, in its report, said that NTPC will benefit from India's clean energy transition
Goldman Sachs has initiated a 'buy' call on NTPC stock with a target price of Rs 265 apiece, which translates to an upside of around 35% from the July 19, 2023 intraday high price. The brokerage, in its report, has said that NTPC will emerge as a winner in India's clean energy transition because of its 'structural advantage' of low-cost debt, which will provide a strong moat
So far in 2023, NTPC's shares have gained over 16% as compared to the Nifty 50's rise of nearly 9%. NTPC shares have outperformed the Nifty50 over a 12-month period as well, and have given returns of over 43% during this time versus 21% gains clocked by the 50-stock index. Over the past month, the power sector has seen a significant return of 85.46%
Momentum indicators RSI and MFI showed that the stock was trading in the mid-range of 50 and 67, respectively. A number above 70 indicates that the stock has entered the overbought zone. NTPC has been a low-beta stock, with a 1-year beta of 0.70, according to Trendlyne. However, over the last month, it has witnessed high volatility and traded at a beta of 1.17
According to share market analysts, NTPC stock has witnessed the formation of the Golden Crossover pattern, a technical analysis pattern that occurs when a stock's short-term moving average crosses above its long-term moving average. The two commonly used moving averages are the 50-day simple moving average (SMA) and the 200-day SMA. This pattern can help investors to identify potential investment opportunities
International brokerage Jefferies is also bullish on NTPC stock. NTPC's dividend yield offers some downside protection, Jefferies said while suggesting a base case target of Rs 205 based on 1.2 times FY25E book value. Even in its bullish scenario, Jefferies' target of Rs 220 stays short of Rs 242.50 level that NTPC hit on January 15, 2008
In a note on June 13, JPMorgan said it is overweight on NTPC. The brokerage has a target of Rs 205 on the stock, as it estimates 10% EPS CAGR over FY23-26 and 4-5% upside to FY25-26 EPS and 15.5% RoE. "Ministry wants to encourage investment in generation and T&D, particularly on the renewable side. Hence, we do not anticipate a material change beyond 50 bps, at most, on the 15.5% regulated ROE," it said
According to analysts at Jefferies, operational efficiency improvements and capacity addition ahead of expectations should contribute to positive surprise potential. "Final regulation on (investment in generation and T&D) should be out in January 2024 and normally mirrors the draft. Power Grid and NTPC are the most impacted by any change in this regulation, with Tata Power and Adani Transmission seeing a lower impact," they said
According to Trendlyne data, while 18 share market analysts have a 'Strong buy' call on the government-owned power giant's stock, 4 analysts recommend investors to 'buy' NPTC shares, while one analyst has a sell call on the counter
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