PSU Alert: NTPC shares rise 5% to record high after Jefferies raises target price to ₹485

Shares of state-owned NTPC Ltd. are trading up nearly 5% on Tuesday, at another record high. The stock is also the biggest gainer on the Nifty 50 index.

Global brokerage firm Jefferies has maintained a ‘Buy’ rating on NTPC and raised its 12-month target price on the stock to ₹485 of ₹445 before.

The target price indicates a potential upside of nearly 23% from the stock’s closing levels on Monday.

Jefferies said NTPC’s first-quarter profit was 11% higher than expected. Fixed cost recovery shortfall was ₹200 crore, compared to ₹100 crore year-on-year, but this was offset by higher coal and gas PLFs.

In the June quarter, capacity additions were minimal at 90 MW. Management has anticipated the addition of 23 GW from FY25E-27, mainly from renewable sources.

According to the brokerage firm, growth in renewable energy capacity and green hydrogen pilot initiatives continue to be factors driving the rating change.

On the other hand, domestic brokerage house Kotak Institutional Equities has given a ‘Sell’ rating to NTPC, saying the prevailing valuations reasonably reflect the growth aspirations, leaving no room for error in the execution of plans.

Kotak believes that the current market price of NTPC shares sufficiently takes into account all the growth aspirations of the company while ignoring the risk of lower than expected returns from renewable assets.

The brokerage house set a multiple of 1.5 times for the regulated return business and 1.2 times for the revolving business, resulting in a revised target price of ₹290 of ₹275 previously.

“The fair value adjustment is due to the carry forward to September 2026 as well as the increase in capacity under construction at thermal and renewable power plants,” Kotak said.

The brokerage house said the addition of 15 GW of coal mining capacity would increase NTPC’s target price by ₹15 per share.

In addition, including future renewable capacity targets of 50 GW would add another ₹$15 per share towards your goal.

At 10 a.m. the company’s shares were trading 3.63% higher ₹$408.20 per unit on the NSE. NTPC shares are up 32% since the beginning of 2024 and 87% in the last one year.