Brokerage’s BUY rating on Power PSU Stock in falling market, target of upside up to 55% met; Wealth has doubled in 2 years

Power PSU Stock to BUY: Brokerage firms are bullish on the stock of power sector’s Maharatna company NTPC. After the results, most analysts have advised BUY on the stock. The net profit of power PSUs has declined marginally in the October-December 2024 quarter. Whereas total income has increased. Brokerage houses believe that this PSU stock is at an attractive valuation after the correction. The company’s pipeline is strong. This stock has corrected about 28 percent from its 52-week high. However, the stock has been a multibagger in the long term. This stock has almost doubled investors’ money in the last 2 years.

NTPC: Upside target up to 55%

Brokerage firm ICICI Securities has maintained BUY rating on NTPC. Also, the target price per share has been reduced from Rs 495 to Rs 430 per share. The stock closed at Rs 323 on Friday (January 24). In this way, from the current price the stock can generate strong returns of about 33 percent going forward.

The brokerage house says NTPC raised Rs 10,000 crore through the IPO of its green subsidiary during the December quarter. Market cap reached Rs 90,000 crore. This was more than the market estimate of Rs 50,000-60,000 crore. This subsidiary of NTPC won new renewables bids of 2.4GW.

The company’s numbers remained stable during the third quarter (Q3FY25). Adjusted profit increased by 5% on a standalone basis. NTPC has approved several power plants at standalone level in the nine months of the current financial year (9MFY25) as well as in the third quarter, improving the growth prospects of the conventional business in the medium term. After the listing of NTPC Green, NTPC shares saw a sharp fall. As a result, it is now trading at its lowest multiple ever. The brokerage believes that the risk-reward of the stock looks better at the current price.

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Brokerage firm Nuvama has maintained a buy advice on NTPC. From a 12 month perspective, the target price has been kept at Rs 412. The brokerage says that the figures remained sluggish in the third quarter, although there will be a special focus on the growth of renewable energy. Nuvama has kept NTPC as its top pick among power sector stocks.

Motilal Oswal has maintained Neutral rating on NTPC. The target price has been kept at Rs 366 per share. This is about 13 percent more than the previous closing. The valuation of the stock is cheap. The execution of the company will have to be monitored.

Antique Broking has advised to buy on NTPC. The target price has been kept at Rs 429 per share. The brokerage says that the situation regarding the order book is strong. Q3 adjusted profit increased by 6 percent year-on-year. However, it was less than expected.

NTPC currently has 30 GW capacity under construction for nine months of the current financial year (9MFY25). There is 17.6 gigawatt thermal capacity, hydro and renewables 12 gigawatt. This is expected to drive consolidated/standalone capacity growth of 10%/1% CAGR during FY 25-27.

Following the results, the brokerage has cut EPS estimates by 2%-3% in FY25-27, taking into account 3Q demand slowdown and a quarter change in capacity additions. The stock has declined 25% in the last 3-4 months and is trading close to its historical average at ~1.7x FY27E BV (standalone) and ~1.5x FY27E BV on a consolidated basis.

Global brokerage Jefferies has maintained ‘BUY’ rating on NTPC. The target price per share has been given at Rs 500. The stock may show a further rise of 55 percent from Friday’s closing price. The brokerage says that the third quarter results were below expectations. However, a strong performance is expected in the fourth quarter. Increasing capacity in this will give a boost to growth in the medium term.

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NTPC: How were Q3 results?

The profit of NTPC Limited (NTPC) in the third quarter of the current financial year 2025 increased by 3.1 percent to Rs 4,711.4 crore. The profit in the same quarter last year was Rs 4,571.9 crore. At the same time, the company’s income increased by 4.8 percent to Rs 41,352.3 crore in the December quarter, which was Rs 39,455 crore in the same quarter a year ago. The company board has decided to give the second interim dividend for the financial year 2024-25. The board has approved an interim dividend of Rs 2.5 (25%) on the face value of Rs 10. The record date has been fixed as 31 January 2025. While the dividend payment is on February 18, 2025.

NTPC: Multibagger in the long run

NTPC’s share has also corrected significantly in the market correction. It is trading about 28 percent below its 52-week high (Rs 448). After the results, there was pressure on the stock on Monday. The stock fell more than 2.5 percent in the early trading session. However, the stock fluctuated. NTPC’s 52 week low is Rs 296. The stock today started flat trading at Rs 323 and made a low of Rs 314.50 in the session till 12:45 pm.

NTPC has provided multibagger profits to investors in the long run. The stock gave returns of about 92 percent to shareholders in the last two years. That is, investors’ money doubled. At the same time, the 3 year return of this Maharatna PSU stock has been 140 percent and the 5 year return has been 185 percent. The market cap of the company on BSE is more than Rs 3.11 lakh crore.

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