Will NTPC cross ₹400? Order book and financial analysis

adminJune 11, 2024

NTPC: The Indian stock market is seething with anticipation. NTPC, the country’s power generation giant, has shown a steady upward trend, raising the curiosity of investors. Can you finally break the coveted 400 points? This isn’t just about numbers, it’s a potential turning point for the company’s future and a test of investor confidence. Buckle up as we analyze the forces driving NTPC’s rise, the challenges it faces, and expert insights that can light the way to a brighter stock price that literally hits 400 and beyond!

NTPC (National Thermal Power Corporation)

NTPC It is a public sector undertaking under the Ministry of Power, Government of India. It is a major player in the Indian power sector. Founded in 1975, the company has played an important role in the country’s economic development by ensuring a reliable supply of electricity. Its core function relies on electricity generation and boasts enormous installed capacity across a variety of sources.

Traditionally, coal-fired power plants have been the main power plants. However, recognizing the growing importance of clean energy, NTPC is actively expanding its renewable energy portfolio, including solar and wind projects. It also manages significant hydroelectric capacity, contributing to a more sustainable energy mix.

Besides power generation, NTPC also undertakes consulting and turnkey project engagements. Their expertise covers various aspects of power plant development, including project management, engineering and operational maintenance.

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What experts and brokers say about the future of NTPC

JM Financials, a leading Indian investment banking firm, has revised its target price on NTPC from Rs 368 to Rs 414 due to continued growth in regulatory capital driven by revival in margin-increment thermal capex investments and gradual improvement in renewable energy practices.

International brokerage firm Jefferies has reportedly increased its target price on NTPC stock to Rs 445 and reaffirmed its Buy rating on the company. Citi maintained its buy position, revising its price target to ₹467 per share. This is due to strong performance growth in the fourth quarter, improved performance visibility due to thermal power generation and ROE regulations, and strengthened execution capabilities.

Even Sharekhan and ICICI Securities have placed buy calls, citing target prices of Rs 425 and Rs 495. ICICI Securities expects EBITDA from RE capacity to grow at a CAGR of 30% over the next three years.

NTPC’s strong performance in FY 2024

NTPC could see a sharp 25% increase in PAT at Rs 21,332 crore in FY 24 compared to Rs 17,121 crore in FY 23. NTPC’s share of subsidiaries and joint ventures accounting profits increased significantly from Rs to Rs 5,533 crore in FY 24. 2,246 crore in FY 23. NTPC Group generated 422 billion units (BU) in FY 24, an increase of about 6% compared to 399 BU generated in FY 23.

NTPC’s captive coal production increased by 48% to 34.39 MMT from 23.2 MMT in FY 23. As a result of improved performance and valuation, the company’s stock price rose toward an all-time high of 393.20.

NTPC’s Aggressive Future Plans

renewable energy sector

NTPC has set an ambitious target of achieving 60 GW. renewable energy The capacity will increase from the current 3.6 GW commissioned capacity by FY 2031-32.

Currently, the company can produce 3.6 GW of renewable energy, 8.4 GW from construction, 11.2 GW from the tender process, 6.6 GW from equivalent land through linked tenders and 4.8 GW from equivalent land bank.

The company has built a strong and visible pipeline with approximately 22-23 GW of renewable projects, including 16 GW. of the sun 6GW Wind power project.

In the near term, NTPC plans to commission 3 GW in FY 2024-25, 5 GW in FY 2025-26 and 8 GW in FY 2026-27. The company’s large-scale capacity expansion plans are being pursued through various strategies, including participating in auctions, establishing joint ventures with state-run power companies/PSUs, and entering the commercial and industrial (C&I) sector.

Angel IPO

NTPC plans to realize the value of its renewable energy business by listing its subsidiary NTPC Green Energy Limited (NGEL) through an IPO tentatively in October-November 2024. NGEL will remain a subsidiary of NTPC after the IPO, with NTPC retaining majority stake. ownership.

The objective of this IPO is to raise equity capital to fund NGEL’s growth plans to enable public investors to participate in NTPC’s renewable energy growth.

Advance into green hydrogen

NTPC is actively exploring opportunities in the emerging green hydrogen sector through various pilot projects. These include green hydrogen mobility projects, construction of green hydrogen-based microgrids, and green export partnerships. ammonia. The company has signed MoUs with companies such as Gujarat Pipavav Port Ltd for development of green hydrogen ecosystem and export of green ammonia.

Partnerships and Strategic Alliances

NTPC is actively seeking partnerships and signing MoUs with state governments and corporations for development of renewable energy projects, green chemicals, green hydrogen and pumped storage projects. Notable MoUs include those with the Gujarat State Petroleum Corporation for green hydrogen blending, the Maharashtra government for green hydrogen, pumped storage and RE projects, and the Nepal Electricity Authority for joint power projects.

These partnerships are intended to leverage synergies, access land banks and capitalize on growth opportunities across the clean energy value chain.

NTPC’s Capex Plan

At the group level, NTPC has guided an annual consolidated capital expenditure of RS 35,000 – 50,000 crore over the next 2-3 years. For FY 24-25, the company has set a standalone capital expenditure target of Rs 22,700 crore. The company has already incurred a cumulative expenditure of Rs 10,733 crore in coal mine development till March 2024. NTPC has also secured foreign currency loans of approximately EUR 750 million through syndicated loans and Japanese Yen worth USD 15 billion from JBIC loans to finance capital expenditure for FGD projects. .

NTPC’s other growth strategies

NTPC plans to add 15.2 GW of new power. thermal power plant Additional capacity is scheduled to be acquired in the near future, adding to the 9.6 GW of production already under construction. To enhance fuel security against heat, NTPC aims to increase captive coal production from 34.39 MT in FY 24 to 50 million tonnes per annum over the next three years. The company is also focused on reducing emissions from its FGD projects.