Target: ₹385
CMP: ₹310.95
NTPC is India’s largest power utility, with a 17 per cent share in the country’s installed power capacity having 76GW operational capacity and contributing 24 per cent (422BU) to India’s total electricity generation in FY24.
Thermal power capacity is set to grow by 25GW by FY32F, which includes 11GW of capacity under-construction and 8.8GW of thermal projects to be awarded in FY25F, supporting the Central Electricity Authority or CEA’s forecast of 80GW additional thermal capacity by FY32F. Simultaneously, NTPC’s listed subsidiary NGEL focuses on renewables, aiming at a capacity of 60 GW by FY32F, with operational renewables to rise from 3.3 GW in FY24 to 15 GW by FY27F.
NTPC’s major capacity expansion and stable cash flow makes it a top investment in India’s energy transition space. Our SOTP valuation highlights NTPC’s leadership and growth potential. The regulated thermal power business is valued at 1.55x FY26F BV, while subsidiaries and JVs are pegged at 1.9x FY26F regulated equity per share with a 20 per cent holding company discount.
We initiate coverage on NTPC with an ADD rating and a SOTP-based target price of ₹385 as a proxy play on India’s 900GW energy transition.
Downside risks: Delay in plant commissioning, changes to CERC regulations and reduction in NGEL’s valuation.