The brokerage firm, Jefferies is bullish on NTPC, India’s largest power generation company. According to them, the company’s strong growth potential driven by its capacity expansion plans, focus on renewable energy, and earnings recovery in the coming quarters, positions it well for long-term growth.

Jefferies bullish on NTPC’s growth, sets target price at Rs 500

Despite a slight miss in its third-quarter earnings for fiscal year 2025, Jefferies maintains a “Buy” rating on the stock. The firm has set a price target of Rs 500 for the stock, based on a 2.5x price-to-book (PB) multiple for FY27E.This valuation reflects a 9% premium over the past upcycle average, with the brokerage firm highlighting NTPC’s better visibility on its growing renewable energy business.

As Jefferies points out, “Execution of projects will drive upside in NTPC from current levels, as it will give credibility to the earnings growth story.”

Let’s take a look at the key reasons why the brokerage firm remains optimistic about NTPC’s prospects

Jefferies on NTPC’s Q3FY25 profits: Slight miss, but recovery expected

Jefferies is optimistic about a strong recovery in the fourth quarter. The brokerage firm notes that under-recoveries during Q3 were more than anticipated, but these are expected to reduce significantly by Q4, bringing in a much-needed boost to earnings.

“Fixed cost under-recovery was Rs 4.7 billion in Q3FY25 compared to Rs 7.4 billion last year, indicating a positive shift,” the brokerage firm added. The firm also pointed out that NTPC is on track to commission an additional 2.7 GW thermal and 2.4 GW renewable energy (RE) capacity in Q4, setting the stage for strong growth going forward.

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Focus on renewable energy and long-term goals

As per the Jefferies report, one of NTPC’s major strengths is its ongoing focus on expanding its power capacity.

The company has made progress in both thermal and renewable energy sectors. In the short term, while the third-quarter earnings fell short of expectations, NTPC’s management remains confident about Q4FY25, with plans to add 2.7 GW in thermal capacity and 2.4 GW in renewable energy.

“NTPC’s renewable energy focus remains at the forefront with 3.5 GW operational and 10.3 GW under construction. With a 17.5 GW renewable energy pipeline already in place, NTPC is on track to meet its ambitious target of 60 GW by 2032,” added the brokerage firm report.

Expansion of thermal capacity

Alongside its renewable energy efforts, NTPC is also expanding its thermal power generation capacity. The company is set to add another 7.2 GW of thermal capacity over the next 1-2 years.

While the outlook is positive, Jefferies points out a few risks that could impact NTPC’s performance.

Delays in land acquisition and module procurement have been challenges in the past, and could cause some disruptions. Additionally, a sharp decline in power demand could pose risks to earnings growth.

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However, Jefferies remains optimistic, stating, “The issues with procurement and land acquisition are now addressed, and focus remains on 16 GW of renewable energy capacity over FY25E-27E, in line with our 15.5 GW estimate.”

NTPC: Q3FY25 performance

NTPC’s Q3FY25 performance showed a 3.1% increase in net profit, rising to Rs 4,711.4 crore from Rs 4,571.9 crore in the same quarter last year. Revenue grew by 4.8% to Rs 41,352.3 crore, compared to Rs 39,455 crore in Q3FY24. EBITDA increased by 20.3% to Rs 1,960.6 crore, with the EBITDA margin improving to 28.9% from 25.2% YoY. The company also declared an interim dividend of Rs 25 per share for its shareholders.

NTPC stock performance

NTPC share price is currently trading at Rs 321.30, down by 2.35 points or 0.73% as of 12:17 PM IST today.

Over the past five days, the share price of NTPC has dropped by 13.10 points, or 3.92%, and has decreased by 13.85 points, or 4.13%, over the past month.

In the last six months, the stock has fallen significantly by 72.75 points, or 18.47%. Compared to its 52-week high of Rs 448.45, the stock is currently well below that level, and its 52-week low stands at Rs 296.85.

The market capitalisation of NTPC is Rs 3.11 lakh crore. Over the past year, the stock has decreased by Rs 3.10, or 0.96%.