Buy NTPC, target price Rs 450: Axis Securities

Axis Securities has a buy call on NTPC with a target price of Rs 450. The current market price is Rs 407. NTPC, incorporated in 1975, is a Large Cap company with a market cap of Rs 397466.34 crore, operating in the power sector.

NTPC's key products/revenue segments include Generation Of Electricity, Other Operating Revenue, Consultancy Income and Lease Rentals for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 45197.77 crore, down -7.73% from last quarter Total Income of Rs 48981.68 crore and down -.41% from last year same quarter Total Income of Rs 45384.64 crore. The company has reported net profit after tax of Rs 4990.50 Crore in latest quarter.

Investment Rationale
According to Axis Securities, NTPC's robust thermal assets provide cash flow visibility. NGEL IPO will unlock the RE business value with its aggressive REcapacity addition targets. We believe NTPC is a good portfolio bet given its stable dividend yield, and a further rerating potential cannot be ruled out if the peak deficits increase in future. The brokerage has cut its FY25/26 EBITDA/PAT estimates as they model higher other expenses post Q2FY25 results. Pickup in RE installation pace will be a key monitorable.

Axis Securities maintains the BUY rating on NTPC. They value the company?s conventional thermal business at 2.4x (from 2.5x) P/BV on its FY27 consolidated regulated BV (from FY26). We value its RE business at EV/EBITDA of 12x on FY27 EBITDA (from FY26).

Their Mar-26 target price of Rs 450/share indicates a potential upside of 12% from the current market price.

Promoter/FII Holdings
Promoters held 51.1 per cent stake in the company as of 30-Sep-2024, while FIIs owned 18.6 per cent, DIIs 26.45 per cent.