Brokerage firm Bernstein has maintained its outperform rating on NTPC with a price target of Rs 274, implying another 13% upside from current levels. The stock is trading close to its record high of Rs 251.50, which it hit on September 30, 2023.

Share Market Live

NSE

Bernstein is one among the 23 analysts that have a buy recommendation on the state-run enterprise.

The brokerage has highlighted four major catalysts for NTPC this quarter - Commissioning of new plants, potential of winning new renewable energy projects, tenders for new plants and regulatory orders.

Within the thermal power generation sector, no other company is adding capacity other than NTPC, according to Bernstein's note. “Evening power shortages are on the rise in India. The solution to this is to add more thermal power - and NTPC is the only large player leading new investment in this space,” it added

Bernstein further said that even in the Renewables sector, no one has “as much money as NTPC.”

“Renewables require 2-3 times the capex of a thermal plant, and an operating renewable plant does not throw enough cash to fund a new one. Hence, cash flow from the coal plants of NTPC will be ‘super-critical’ to meet India's 50GW/year renewable capacity addition plans,” the note mentioned.

Meanwhile, in the green hydrogen sector as well, private companies are issuing orders to NTPC to set up a renewable plant to supply power to their electrolysers, observed Bernstein.

The research firm further mentioned that NTPC was sitting on a huge advantage of borrowing cost and receivables.

“NTPC has a borrowing cost of 6-7 percent compared to 9-10 percent for most private players. In a business where the cost of debt is the biggest differentiator as execution is relatively easy, it sees them make superior returns than peers,” it noted.

Shares of NTPC are currently trading little changed at Rs 242. The stock is among the top performing stocks on the Nifty 50 index in 2023, with gains of 44%.

(Edited by : Hormaz Fatakia)