2.05% Yield: ICICI Direct Suggests BUY; Maharatna PSU Power Stock Is Positive About Winning Major Projects

This week, Powerpack NTPC Limited’s trading has been positive, and Tuesday was no exception. At the beginning of this week, the Maharatna stock hit a new 52-week high of Rs 358 per share. The company’s recent victories over mega and renewable power projects are the cause of the positive trend. Because of NTPC’s significant capacity increase, which is anticipated to continue, ICICI Direct has advised purchasing the company at the latest.

As of Tuesday at the time of writing, NTPC’s market value was Rs 3,44,183.16 crore, and its share price was up 0.33% on the BSE at Rs 354.95 per. NTPC reached an intraday high of Rs 357.55 per share in the early trading.

On Monday, the business reached a new 52-week high. With NTPC shares soaring over 101% on the BSE thus far in a year, investors’ money has doubled. The potential is almost 180% after five years.

Following the company’s announcement on Monday that it had obtained investment permission for the Singrauli Super Thermal Power Project, Stage-III (2×800 MW) at an anticipated current estimated cost of Rs 17,195.31 crore, the stock market began to become optimistic.

Additionally, on February 4th, NTPC said that Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) and NTPC Green Energy Limited (NGEL), a fully owned subsidiary of NTPC Limited, had inked a joint venture agreement for the development of renewable power parks and projects in Uttar Pradesh.

The Renewable Generation Obligation (RGO) of the UPRVUNL will be satisfied by the REpower produced by the planned JVC.

This aligns with the goals of NTPC.

Chirag J. Shah, Research Analyst at ICICI Direct, said in a research note: “The company’s aggressive strategy to develop renewable capacity to the tune of 16000 MW during FY24E-FY26E would scale up its green portfolio and cause the stock to rerate. The stock is valued at 2.2 times the P/BV of FY26E.”

In presenting the case for investment, Shah emphasized two key points:

Upscaling thermal business through FY30:

Over the last five years, only NTPC has increased its coal-based capacity, reaching a consolidated installed base of 73000 MW.

NTPC plans to commission 9300 MW of coal-based facilities by FY25–26. These projects are currently under development. According to Shah’s memo, “This we believe will lead to 11% generation growth supported by strong PLFs (averaging above national level PLFs) 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.”

aggressive emphasis on renewable energy in the forefront:

Its medium-term goal is to have 60 GW of renewable power by 2032. Its ambitious strategy to increasing renewable energy, including green hydrogen, seeks to have 45–50% of its capacity originate from non-fossil fuels by 2030.

The firm now has 5900 MW of projects under construction, around 11,000 MW of projects in the pipeline, and 3300 MW of installed renewable power. By FY26E, the management expects to have reached 20,000 MW of renewable capacity. Additionally, NTPC is working hard to expand into nuclear electricity and green hydrogen (a joint venture with NPCIL).

Shah has thus set a 12-month target price of Rs 400 for NTPC.

NTPC is a power stock that pays dividends. For the fiscal year 2023–2024, the corporation went ex–dividend last month. The second interim dividend would be paid at a rate of 22.50%, or Rs 2.25 per share on a face value of Rs 10 each. Earlier, NTPC distributed Rs 2.25 per share, or 22.5%, as its first interim dividend for FY24. The corporation paid dividends up to 72.50%, or Rs 7.25 per share, in the fiscal year 2022–2023.

At the moment, NTPC offers a 2.05% dividend yield.