ICICI Direct has given Buy recommendation for NTPC with a target price of Rs. 190 in its research report issued on Apr 26, 2022

ICICI Direct’s research report on NTPC

NTPC has set aggressive renewables long term capacity addition target of 60000 MW by 2032, which was earlier pegged at 30000 MW. The company currently has 6500 MW of renewable projects in various stages. Out of this, 1600 MW has been commercialised and ~3500 MW will come under commissioning in the next 18 months. The company expects to spend ~40% of total capex planned for FY22, FY23 on renewable projects. This share is going to further increase from FY25 beyond, which indicates very strong addition in renewable portfolio from FY24 onwards The company is expected to generate IRR’s in the range of 11-12% despite low renewable tariffs, which we believe is commendable. The company may also unlock value in its renewable arm via an IPO over FY23-24, which will further provide a fillip to valuations. The company has also started making inroads in other avenues of green energy like hydrogen. NTPC awarded project of ‘Standalone Fuel-Cell based Micro-grid with hydrogen production using electrolyser’ at NTPC Simhadri. On the other hand, the company recently issued tenders and has invited online bids from electrolyser technology providers, with whom the company intends to participate in upcoming tenders on green hydrogen. This tender intends to select electrolyser technology provider(s) for two years for polymer electrolyte membrane (PEM) technology of 400 megawatt (MW) and non-PEM technology of 600 MW With strong focus on alternative energy spectrum NTPC may be able to break the underperformance of the last decade and undergo a re-rating.


We change our rating from HOLD to BUY. We value NTPC at Rs 190 i.e. 1.4x FY23E book value.

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