Buy NTPC Ltd For Target Rs.300 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Powering the Green Transition…
About the stock: NTPC is India’s largest power generation company with a total installed capacity of ~73000 MW at the group level as of FY23.
* NTPC has 17% of total installed capacity in India with 24% generation share
* The company’s vision is to become a 130 GW+ company by 2032 of which 60 GW would be contributed by renewable energy
Key Investment Thesis:
* Base business to grow and outperform other players in the medium term: NTPC has been the only company which has added coal-based capacities over last 5 years and reached an installed base of 73000 MW on a consolidated basis. Going ahead, NTPC is having 9300 MW of coal-based plants under construction which will be commissioned by FY25-26. This we believe will lead to 11% generation growth supported by strong PLF’s (averaging above national level PLF’s) on thermal business and will help regulated equity growth at a CAGR of 9% from ? 77,628 crore in FY23 to ? 99,000 crore by FY26E.
* Strong focus and execution across green energy spectrum to help diversify from the grey business: With an aggressive approach to expanding renewable energy, including green hydrogen, NTPC aims for nearly 45-50% of its capacity to come from non-fossil fuels by 2030, with the medium-term target of 60 GW of renewable capacity by 2032. Currently, the company has 3300 MW of installed renewable capacity and 5900 MW of projects under construction and ~11000 MW of projects in the pipeline. The management is fairly confident of reaching 20000 MW of renewable capacity by FY26E. Also NTPC is striving hard to diversify into areas like green hydrogen, Nuclear power (JV with NPCIL), C&I, etc.
Rating and Target Price
* NTPC has set out an aggressive renewable capacity addition plan to the tune of 16000 MW over FY24-FY26, which will scale up the green portfolio of the company and lead to rerating of the stock. Per year addition of 4000-5000 MW of renewable capacity and strong growth in regulated equity in the conventional thermal portfolio We estimate EBITDA and PAT to grow at 16.1%, and 16% CAGR respectively over FY23- 25E
* We maintain our BUY rating on NTPC. We value the stock at ? 300 per share (based on 1.8x FY25 Book Value)
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
