This Maharatna Company Posted Good Q1FY23 Results, Buy For 20% Gains: ICICI Direct

ICICI Direct in its recent report on NTPC Ltd where the brokerage suggests buy the stock of the company for a target price of Rs 190 apiece. NTPC is a power sector Maharatna company having a market capitalization of Rs 1,54710 crore. It is a large-cap company. NTPC is India's largest power generation company with a total installed capacity of 69134 MW at the group level. NTPC has 17% of the total installed capacity in India with a 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.

Stock Outlook & Returns

NTPC Ltd. today opened at Rs 160.05 apiece, and currently trading at Rs 150.90 apiece, tanked 0.41% from the previous close of Rs 159.55 apiece. Its current market price is trading Rs 7.45 below the 52-week high which is Rs 166.35 apiece. The 52 week low of the stock is Rs 111.95 apiece.

The stock surged 6.71% in a week, and 13.58% in 1 month, respectively. Over the past 1 week the stock has gained 35.78%, whereas, in the past 3 years, the stock moved up by 29.77%, respectively. In the past 5 years, the shares gained 11.1%.

The ROE is 12.31%. TTM PE ratio is 8.91 and PB ratio is 1.11. TTM EPS is Rs 17.74. The dividend yield is 4.43% and the face value is Rs 10.

If the stocks of the company are bought at the current market price the investors can expect potential gains of 20% in 12 to 15 months, according to the estimated target price of the stock by the brokerage.

Q1FY23 Results

NTPC posted a good set of numbers for Q1FY23. Revenues came in at Rs 38349.8 crore vs. our estimate of Rs 33893 crore. EBITDA was at Rs 9082 crore vs. our estimate of Rs 9251.4 crore, up 22.1% YoY. Reported PAT was at Rs 3676.4 crore led by higher tax and under recovery of fixed costs in two power stations.

Strong capacity addition to drive performance going ahead, Buy

According to the brokerage firm, "With strong focus on alternate energy spectrum, we believe NTPC may be able to break the underperformance of the last decade and may witness a rerating coupled with monetisation of the renewable energy arm in FY23E. We maintain our BUY rating on the stock. We value NTPC at Rs190 i.e. 1.3x FY24E book value."

 

Key triggers for future price performance

NTPC has 2000 MW commercialised renewable capacity while ~4000 MW is under construction. It is expected to reach a capacity of 10 GW by 2026. The company expects to spend ~40% of total capex planned for FY23, FY24 on renewable projects.

About - NTPC Limited

NTPC is India's largest power utility with an installed capacity of 69,134.20 MW (including JVs), plans to become a 130 GW company by 2032. Established in 1975, NTPC aims to be the world's largest and best power major. NTPC has comprehensive Rehabilitation & Resettlement and CSR policies well integrated with its core business of setting up power projects and generating electricity. 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 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 check with certified experts before taking any investment decision.