Buy NTPC Ltd For Target Rs.419 By Geojit Financial Services Ltd
Resilient Ops Drive Long-Term Valuation Upside
NTPC Ltd owns and operates electricity generation plants that supply power to state electricity boards in India. The company generates power from coal, gas, liquid fuel, nuclear, hydro, solar, wind and other renewable sources. It has an operational capacity of over 90 gigawatts (GW).
* Consolidated revenue from operations grew 7.8% YoY to Rs. 50,741cr in Q1FY27, driven by higher generation revenue and contributions from other businesses.
* Revenue from the generation business grew 7.1% YoY to Rs. 49,143cr, while revenue from other businesses rose 35.3% YoY to Rs. 6,619cr in Q1FY27.
* At the operational level, EBITDA soared 24.7% YoY to Rs. 16,631cr, primarily driven by higher revenue and better cost absorption.
* Consequently, the EBITDA margin expanded 450bps to 32.8% in Q1FY27, reflecting improved operational efficiency.
* Reported profit after tax climbed up 12.9% YoY to Rs. 6,896cr, supported by robust operating performance, but moderated by higher tax expenses (+36.6% YoY) and lower net movement in regulatory deferral account balances (-74.1% YoY).
Outlook & Valuation
NTPC remains best positioned to benefit from India’s long-duration power demand growth through its unmatched visibility on regulated capacity additions, with ~36GW under construction and a planned Rs.17 lakh crore investment programme through FY37 spanning thermal, renewables, storage and nuclear. Management’s confidence in sustaining strong thermal utilization despite rising renewable penetration, coupled with improving receivable cycles, growing captive coal contribution and a low cost of borrowing, reinforces earnings visibility and funding flexibility. We expect NTPC’s regulated equity base and clean-energy portfolio to drive an 8.9% revenue CAGR and 10.4% EBITDA CAGR over FY26-FY28E. Therefore, we reiterate our BUY rating with a revised target price of Rs. 419, based on 9.2x FY28E EV/EBITDA.
Key highlights
* The NTPC Group’s installed capacity stood at 90,904 MW as of June 26, with a net addition of 1,796 MW during Q1FY27. The addition was tilted toward clean capacity, with 976 MW renewables, along with 820 MW thermal, during the quarter.
* NTPC’s coal plant load factor expanded 155bps YoY to 76.71% in Q1FY27, well ahead of the rest of India average of 70.32%, underscoring sustained operational outperformance and better asset sweating.
* NTPC’s fuel mix continues to improve, with captive coal now meeting 19.26% of its total coal requirement, reducing dependence on external domestic coal procurement, thus improving fuel security.
* Sustainability traction remained strong, with biomass co-firing rising sharply from 3.7 lakh MT to 5.7 lakh MT YoY, indicating steady progress on cleaner thermal generation initiatives.
* NTPC has a strong growth runway with 35.7GW of capacity under construction, led by 16.4GW in renewables, 15.7GW in coal and 3.6GW in hydro/PSP, providing multi-year commissioning visibility and supporting medium-term regulated/green capacity expansion.
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