NTPC shares fall over 2% despite brokerages raising target; what should investors do?
- NTPC reported a rise of 16.6% in its consolidated net profit for Q2FY24 at ₹3,885 crore as compared to ₹3,331 crore in the corresponding period last year. The company’s revenue from operations fell marginally to ₹40,875 crore from ₹41,015 crore in the year-ago period.
NTPC share price declined over 2% on Monday after the company reported its Q2 results. NTPC shares fell as much as 2.45% to ₹230.75 apiece on the BSE.
The state-run power generator NTPC reported a rise of 16.6% in its consolidated net profit for Q2FY24 at ₹3,885 crore as compared to ₹3,331 crore in the corresponding period last year. The company’s revenue from operations fell marginally to ₹40,875 crore from ₹41,015 crore in the year-ago period.
NTPC board also approved the first interim dividend of ₹2.25 per share for FY 2023-24 on the face value of paid-up equity shares of ₹10 each. The date of payment/dispatch of dividend will be November 23, 2023.
Brokerages maintained their bullish view on NTPC and raised the target price after the announcement of Q2 results. Here’s what brokerages said:
Antique Stock Broking
NTPC’s adjusted net profit for H1FY24 was ₹73 billion, up 4% YoY. The regulatory impact of previous year sales and fuel shored up the reported profit by ₹9.4 billion, the brokerage house said.
The company has 74 GW of installed capacity, with 17 GW (10 GW of conventional + 7 GW of Renewable Energy) of assets under construction. Further, NTPC has 39 GW under feasibility, making a case for a portfolio of 130 GW by 2032.
With renewed focus on renewable energy, Antique Stock Broking believes re-rating drivers like improving ESG scores and new capacity addition remain intact.
The brokerage maintained a ‘Buy’ rating on NTPC and raised the target price by 6% to ₹274 per share.
However, it believes key risks include lower RoE of solar projects, policy changes on fixed charges and ESG scores worsening, or in status quo.
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Nuvama Institutional Equities
NTPC delivered Q2FY24 adjusted PAT of ₹34.9 billion (down 3% YoY) on O&M shutdown-related fixed cost under-recoveries of ₹3.8 billion (up 171% YoY).
“These shutdowns are normally spread across Q1-Q2 every year; however with no shutdowns possible in Q1FY24 (on peaking demand), they were all bunched into Q2. However, most of the impact of this shutdown is expected to see a full recovery as PAFs rise in H2FY24, implying no impact on annual profits,” the brokerage noted.
NTPC expects 15GW of RE capacity by FY26 versus 3GW currently, while targeting 11GW of thermal capex (from 7GW) implying 4.5GW of fresh ordering.
The brokerage retained its ‘Buy’ call on the stock and raised the target price to ₹274 per share from ₹261 earlier as it raised core RoE to 17% versus 16.5% earlier.
JM Financial
With visibility of 20GW RE generation capacity by FY26 and entry into pumped hydro storage with 14GW of the portfolio, the journey of NTPC continues with the transition to a balanced portfolio (45% renewables, 47% Thermal, 8% others) by FY32, JM Financial said.
Given the continued growth momentum, it revised its estimates upwards for FY25 and roll forward to FY26.
It maintained a ‘Buy’ rating and raised the target to ₹270 per share from ₹240 earlier.
At 10:40 am, NTPC shares were trading 1.37% lower at ₹233.30 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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