Big expansion plans, higher dividends expectations - Emkay bullish on this PSU power stock
Premium- NTPC, with 69 GW of capacity, has huge expansion plans over the next decade, said brokerage Emkay
NTPC, with 69 GW of capacity, has huge expansion plans over the next decade – 130 GW by 2032 with 60GW of RE capacity. NTPC is expected to monetize its RE assets in the near future and continues to target 60+GW RE assets by 2032. The incremental thermal assets will add to steady earnings growth, said brokerage Emkay.
“We believe while NTPC has shown its competitive stance on RE bids (11 GW 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 on NTPC shares with March 2023 target price of ₹188," the note stated.
While many companies have indicated not to add any further 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.
Emkay believes 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.
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.
The company has paid dividend (including tax) of ₹5,531 crore in FY21 and ₹6,933 crore in FY22, and the brokerage has higher estimates of ₹7,022 crore, ₹7727 crore and ₹9,083 crore for FY23E, FY24E, and FY25E respectively.
NTPC’s board has accorded investment approval for Talcher Thermal Power Project Stage III, which seems to be the first step towards adding ~5GW of brownfield thermal capacity in the medium term, as stated by the company in the previous quarter.
“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, roundthe-clock solutions like brownfield thermal have found their importance in the industry," Emkay's note added.
MINT PREMIUM See All
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less