ICICI Direct Suggests Buy Power Sector PSU Stock, Sees 22% Upside, Board Recommends Dividend

Broking firm ICICI Direct maintains its positive outlook on the stock of NTPC Ltd. a Power sector Maharantna Status CPSE. It has assigned a target price of Rs. 210 apiece to the stock for decent gains of up to 22% if the stock is purchased at the current market price.

On Friday, 19 May 2023, the Board recommended a final dividend of Rs. 3 per equity share for the financial year 2022-23. The recommended dividend is subject to the approval of the shareholders in the AGM. Details below.

Recommends Dividend

According to the regulatory filing by the Board of Directors of the NTPC, "The Board of Directors have also recommended the final dividend of Rs. 3/- per equity share for the financial year 2022-23, subject to approval of the Shareholders in the ensuing Annual General Meeting. The final dividend is in addition to the interim dividend of Rs. 4.25 per equity share for the financial year 2022-23 paid in February 2023."

Q4FY23 Results

According to ICICI Direct, NTPC posted a good set of numbers for Q4FY23. Gross generation and energy sold was at 89.7 billion units (BUs) and 77.8 BUs, which were higher than our estimates. Plant load factor (PLF) for Q4FY23 was at 80.3% vs. 68.9% in Q3FY23. EBITDA came in at Rs. 11109.5 crore. Lower finance costs at Rs. 2581.7 crore also aided PAT along with strong operational performance. PAT came in at Rs. 5672.3 crore vs. our estimate of Rs. 5237 crore.

Valuation & Key Triggers For Future Price Performance

According to ICICI Direct, The company has set out an aggressive renewable capacity addition plan to the tune of 16000 MW over FY24-26, which is expected to scale up the green portfolio of the company and lead to a rerating of the stock. "We maintain our BUY rating on the stock. We value NTPC at Rs. 210 i.e. 1.3x FY25E book value," the brokerage has said.

According to the brokerage, the key triggers for future price performance would be, Per year addition of 4000-5000 MW of renewable capacity and strong growth in regulated equity in the conventional thermal portfolio

Stock Outlook - Market Price, 52-Week High/Low, and Returns

The stock is currently trading at Rs. 174.40 apiece, up 0.63% from its previous close of Rs. 173.30 apiece. Its 52 week high is Rs. 182.95 apiece and 52-week low is Rs. 134.95 apiece, respectively.

The stock fell 0.94% in the last 1 week, while it gained 2.715 in the last 1 month. It jumped 16.51% in 1 year. In 3 years, it jumped 91.64%. The stock has given 26.6% return in the last 5 years.

About - NTPC Ltd.

NTPC is India's largest power generation company with a total installed capacity of 69134 MW at the group level. NTPC has 17% of total installed capacity in India with 24% generation share. The company's vision is to become a 130 GW+ company by 2032 of which 60 GW would be contributed by renewable energy.

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.