Buy This Power Stock For High Returns, With Huge Expansion Plan Of 130GW: Emkay Global

Reputed brokerage firm Emkay Global has recommended investors to buy the stock of NTPC. It is being traded at a near 52-week high price now. The brokerage firm said, "NTPC, with ~69GW of capacity, has huge expansion plans over the next decade - 130GW by 2032 with 60GW of Renewable Energy (RE) capacity. With 16GW of under-construction projects, it will add 4-5GW per year in the medium term."

Stock To Buy: Target Price

The Current Market Price (CMP) of NTPC is Rs. 164. Emkay Global has estimated a Target Price for the stock at Rs. 188. This stock has the potential to give a 14.80% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 158,007 crore, offering 4.30% dividend yield.

Stock Outlook
Current Market Price (CMP)	Rs. 164
Target Price	Rs. 188
Potential 1 year return	14.80%
52 week high share price	Rs. 166.35
52 week low share price	Rs. 112.40

Financial Result

The company's revenue in FY22 was recorded at Rs. 11,61,373 mn, which is expected to be at Rs. 11,18,112 mn in FY23. Their EBITDA in FY22 stood at Rs. 3,38,457 mn, which is expected to be at Rs. 3,63,526 mn in FY23. The company's adj. PAT in FY22 was recorded at Rs. 1,56,057 mn, which is expected to be at Rs. 1,71,713 mn in FY23.

Why Should Investors Buy This Stock: Emkay Global

According to Emkay Global, "We believe the recent power deficit in the country (April 2022 and October 2021 saw power cuts in a few states) has prompted this move by the company. Considering that battery energy storage system and pumped storage system are still in their early stages, round-the-clock solutions like brownfield thermal have found their importance in the industry. We believe while NTPC has shown its competitive stance on RE bids (~11GW under various stages), its recent decision to add ~5GW of thermal power provides steadiness in the earnings outlook going ahead. We maintain our Buy rating with March, 2023 Target Price of Rs. 188."

Current projects - RE

NTPC currently has ~11.5GW of RE projects under various stages (~2GW installed, ~4.1GW under construction, 2.2GW bids won, and 3.2GW under tendering). While the long-term target is 60GW by 2032, the company intends to have 14-15GW in the next few years. NTPC is setting up the country's largest Solar Park of 4.75GW in Gujarat and has invited bids for 3000MWh ESS and 500MWh BSS, the firm informs.

Focus on thermal capacity

NTPC recently accorded investment approval for 1320MW brownfield Talcher plant. This is the first thermal investment that the company intends to do after several years. "We believe the decision has been triggered by power cuts in a few states and strong upsurge in power demand. Power demand can see strong growth in the medium term with various schemes such as PLI and several initiatives by the government to improve manufacturing base in the country. A number of these activities might add to the country's peak demand, which only battery and other storage solutions can provide. Further, a number of old thermal units would retire due to lower efficiency and environmental concerns. Being a Maharatna company, NTPC has taken the initiative to add some brownfield capacity," Emkay Global mentioned.

Company Portfolio

NTPC is India's largest power utility with an installed capacity of 69,464 MW (including JVs), which plans to become a 130 GW company by 2032. Established in 1975, NTPC aims to be the world's largest and best power major. The company is committed to generating reliable power at competitive prices in a sustainable manner by optimising the use of multiple energy sources with innovative eco-friendly technologies thereby NTPC is contributing to the economic development of the nation and upliftment of the society.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.