NTPC hits 52-week high on winning 1.9 GW solar projects under CPSU scheme

In the last one month, the stock has rallied 16 per cent, as against a 7 per cent rise in the S&P BSE Sensex.

Shares of state-owned electric utilities company NTPC registered a fresh 52-week high at Rs 132.10, up 4 per cent on the BSE in Tuesday’s intra-day trade after the company confirmed the winning of 1.9 GW solar projects under Central Public Sector Undertaking (CPSU) scheme.

The stock surpassed its previous high of Rs 127 hit on September 24, 2021. In past one month, the stock has rallied 16 per cent, as compared to 7 per cent rise in the S&P BSE Sensex.

“NTPC has won 1.9 GW in the auction of CPSU Scheme-II, Tranche-III of 5 GW. However, Company has no material information to add to above mentioned news item which is in the normal course of business of the Company,” NTPC said on clarification on news report.

Indian power sector is evolving at a fast pace and the power demand is increasing rapidly. India recently witnessed all-time high peak demand of 200.57 GW and energy met of 4508 MUs in a day on July 07, 2021. The country also registered a generation growth of 17.17 per cent in Q1FY2021-22. “The growth in demand augurs well for your Company. These numbers coupled with ‘Atmanirbhar Bharat’ initiative indicate that there is huge potential for growth in the power sector going forward,” NTPC said in FY21 annual report.

NTPC is a market leader in power generation, supplying around 23 per cent of the country’s electricity supply and thus plays a key role in India’s economic activity.

Despite the COVID-19 threat, the company has been continuing with its long-term plan with a target to achieve total installed capacity of 130+ GW and a renewable energy (RE) capacity of 60 GW, by 2032. NTPC Renewable Energy Limited (NTPC REL), a wholly-owned subsidiary company of NTPC has been incorporated for a focused approach on green capacity addition.

NTPC aims to transform itself to become a major energy player from currently a generation-only company. It has integrated ‘The Brighter Plan 2032’ into its core business strategy, which has 26 KPIs in seven business areas.

NTPC’s RE target of 60GW by CY32 looks achievable (the only hurdle may be related to demand for the power generated) and its seriousness is evident in the recent 450MW hybrid bid win at Rs 2.34/unit at SECI 1.2GW auction, and 325MW solar bid win at Rs 2.33/unit at RUMSL 450MW auction. We expect valuation rerating to happen as the percentage share of RE capacity increases over the years, which is also seen in the case global power utilities, analysts at ICICI Securities said in company update.