Power Consumption Rising With Economic Recovery, Buy This Power Stock For 48% Upside

The Covid pandemic earlier impacted the power sector and fuel sector staggeringly, due to imposed lockdown across the state. However, with the relaxation of norms, the manufacturing sector, commercial and travel sectors are showing more demands for power. Hence, the power generation companies are expecting a major boost, with their stock rise. Brokerage firm Emkay Global recommended buying NTPC's stocks for 48.5% returns.

Target Price

The Current Market Price (CMP) of NTPC is Rs. 121. The brokerage firm, Emkay Global Recommends has estimated a Target Price for the stock at Rs. 180. Hence the stock is expected to give a 48.5% return, in a Target Period of 1 year. The overall economic recovery, acceleration in power generation, and focus on renewable energy are driving the growth for NTPC.

Stock Outlook
Current Market Price (CMP)	Rs. 121
Target Price	Rs. 180
1 Year returns	48.50%

Company performance

NTPC's Revenue stood at Rs. 9,92,067 mn in FY 21, while it is expected to grow to Rs. 10,52,055 mn in FY 22. APAT stood at Rs. 1,38,067 mn in FY 21, while it is expected to grow at Rs. 1,44,028 mn in FY 22. EBITDA was at Rs. 2,88,034 mn in FY 21, while it is expected to grow at Rs. 3,41,859 mn in FY 22. Generation from NTPC units stood healthy at 11.5% YoY so far in Q3FY22 (till Dec 22, 2021), with a 2-year CAGR of ~9%. YTD growth has been 13.6% due to the low base in H1FY21.

Comments by Emkay Global

Emkay Global said, "NTPC continues to win solar/RE bids on the back of its low cost of funding, significantly strong cash flows, and project management abilities. NTPC has won 500MW in SECI's recent 1,785MW Rajasthan Tranche IV bid. Six players had submitted their bids in the Rs2.17-2.18 range, which highlights stiff competition. NTPC has signed an MoU with ONGC to form a joint venture for the development of offshore wind projects. It has also inked a pact with DVC to develop solar plants on DVC reservoirs and land."

About the company

Established in 1975, NTPC is India's largest power utility with an installed capacity of 67,907.5 MW (including JVs), plans to become a 130 GW company by 2032, with a diversified fuel mix and a 600 BU company in terms of generation. Coal would continue as the predominant fuel with a 65% share of coal-based capacity in the portfolio, non-fossil fuel-based capacity would achieve a share of 30%, and Thermal based generating capacity share would be 70%. Share of Renewable Energy - RE (including hydro) would be 28%. NTPC committed to installing 60GW RE by 2031.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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