Bullish brokerages power NTPC to hit 52-week high despite tepid Q1 earnings

CLSA said ‘buy’ NTPC’s stock with a target price of Rs 240. It sees return on equity rising 180 bps over FY23-25 for NTPC.

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Shares of NTPC rallied 3 percent on July 31 to a 52-week high of Rs 216.65, despite lukewarm earnings in the quarter ended June. At 11am, the stock was trading 2.5 percent up at Rs 215.3 on the BSE.

The country’s largest power generation company reported a standalone net profit of Rs 4,066 crore for the first quarter of financial year 2023-24, up 9 percent on-year, while its revenue was down 2 percent to Rs 39,122 crore.

CLSA said ‘buy’ the stock with a target price of Rs 240. It sees the return on equity rising 180 bps over FY23-25 for NTPC.

The stock is trading at an average Price-to-Earnings multiple of 10 times with the earnings per share CAGR (Compounded Annual Growth Rate) of 13 percent over FY23-25 and 4 percent dividend yield, the foreign brokerage firm said.

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Though both profit and sales fell short of expectations, the average estimate for standalone profit during the June quarter was Rs 4,543.23 crore and sales was Rs 40,404.53 crore.

During the quarter under review, the company recorded gross power generation of 88.55 billion units (BU) in Q1FY24, which is 2.16 percent lower, as against 90.50 BUs a year ago. In this quarter, India had witnessed a record-high power demand of 223.23 GW amid soaring temperatures.

The total installed capacity of the NTPC Group stood at 73,024 MW in Q1FY24, as against 69,114 MW a year back. On a standalone level, NTPC recorded a total installed capacity of 57,038 MW, ]down from 57,119 MW last year.

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