NTPC surges 6% on heavy volumes; stock hits over 2-year high

Shares of NTPC hit over two-year high of Rs 163.10, after rallying 6 per cent on the BSE in Monday’s intra-day trade on the back of heavy volumes, in an otherwise weak market. The stock of state-owned electric utilities company traded at its highest level since October 2018.

At 11:10 am; NTPC quoted 5 per cent higher at Rs 161.80 as against 2.1 per cent decline in the S&P BSE Sensex. The trading volumes on the counter nearly doubled as 39.69 million shares changed hands on the NSE and BSE.

In the past one month, NTPC has outperformed the market by surging 22 per cent on expectation of strong power demand. In comparison, the benchmark index was down 1.3 per cent. The stock has zoomed 58 per cent in a year as against 17 per cent rise in S&P BSE Sensex.

Earlier this month, NPTC incorporated a wholly owned subsidiary in the name of 'NTPC Green Energy Limited'. On April 2, the company declared commercial operation of last part capacity of 80 megawatts (MW) out of 160 MW Jetsar Solar PV Project in Rajasthan. With this, the standalone installed and commercial capacity of NTPC has become 54596.68 MW while group installed and commercial capacity of NTPC has become 68961.68 MW and 68301.68 MW respectively.

Analysts at Sharekhan believe that the company's risk-averse regulated business model provides earnings growth visibility and retained earnings (RE) expansion. "It would gradually drive re-rating of the stock as it would allay concerns on ESG (environment, social and governance) front. Additionally, potential monetisation of its RE and power trading subsidiaries could further improve shareholders’ returns in the coming years,” the brokerage firm added.

The management guided commercialisation of 5 gigawatts (GW), 7.3-8 GW, and 4 GW of capacities in FY22E, FY3E, and FY24E, respectively. The guidance is aimed to drive 10 per cent CAGR in standalone regulated equity over FY21-24E and renewable energy (RE) capacity target of 3.5 GW in the next two years. The management also targets to reduce fixed cost under recovery to Rs 350 crore by March 2022 as compared to Rs 650 crore in 9MFY22.

NTPC plans to monetise RE assets through initial public offering (IPO) or induction of strategic investors to unlock value. The company has also awarded project of Standalone Fuel-Cell based Microgrid with hydrogen production using electrolysers.

Meanwhile, ICICI Securities maintains ‘buy’ rating on NTPC with target price of Rs 179 per share. “NTPC has remained largely range bound in the last five to six months while heavyweights from the sector took the lead. However, the stock has exhibited strong outperformance compared to its peers. The stock is moving out of the hurdle of Rs 150 levels. The price distribution is also suggesting limited downward movement in the stock,” the brokerage firm added.