NTPC shares jump 5% to record high after Jefferies raises target price to ₹485 – EQ
In Short : NTPC shares surged by 5% to a record high after Jefferies raised the target price to ₹485. This boost reflects investor confidence and positive market sentiment towards NTPC’s growth prospects and financial performance.
In Detail : Jefferies believes the ramp-up in renewable energy capacity and pilot initiatives on green hydrogen continue to act as re-rating drivers.
Shares of state-owned NTPC Ltd. are trading with gains of nearly 5% on Tuesday and are at another record high. The stock is also the top gainer on the Nifty 50 index.
Global brokerage firm Jefferies has maintained a ‘Buy’ rating on NTPC and increased its 12-month target price on the stock to ₹485 from ₹445 earlier.
The price target implies a potential upside of nearly 23% from the stock’s closing levels on Monday.
Jefferies said that NTPC’s first-quarter profit was 11% above expectations. The fixed cost under-recovery was ₹200 crore, compared to ₹100 crore year-on-year, but this was balanced by higher coal and gas PLFs.
During the June quarter, capacity addition was minimal at 90 MW. The management has guided for an addition of 23 GW from FY25E-27, led by renewables.
According to the brokerage, the ramp-up in renewable energy capacity and pilot initiatives on green hydrogen continue to act as re-rating drivers.
On the flip side, domestic brokerage house Kotak Institutional Equities has assigned a ‘Sell’ rating on NTPC, saying its prevailing valuations reasonably capture the growth aspirations, leaving little room for execution slip-ups.
Kotak believes that NTPC’s current market price sufficiently captures all its growth aspirations while disregarding the risks of lower-than-expected returns from renewable assets.
The brokerage has assigned a multiple of 1.5 times for the regulated return business, and 1.2 times for the renewable business, yielding a revised target price of ₹290 from ₹275 earlier.
“The revision in fair value is on account of roll-forward to September 2026E as well as an increase in under-construction capacity for thermal as well as renewable power plants,” Kotak stated.
The brokerage said that an addition of 15 GW of coal capacities would increase NTPC’s target price by ₹15 per share.
Additionally, the inclusion of future renewable capacity targets of 50 GW would add another ₹15 per share to its target.
At 10 am, the scrip was trading 3.63% higher at ₹408.20 apiece on the NSE. NTPC shares have gained 32% so far in 2024 and 87% in the past one year.
