Earnings steady, valuations cheap: NTPC remains Nuvama's top power play

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Power sector giant NTPC remains Nuvama Institutional Equities’ (Nuvama) top pick in the power utilities space, supported by resilient earnings growth, healthy return ratios, and robust capacity expansion plans across thermal, hydro, and renewable segments. 

 

The brokerage expects the state-run major to deliver a 6 per cent earnings per share (EPS) compound annual growth rate (CAGR) over FY25-27E, supported by a steady core return on equity (RoE) of around 17 per cent and a sizeable ₹2.2 trillion capex pipeline (about 22GW under construction, split evenly between thermal/hydro and renewable energy). 

 

Despite these strengths, the NTPC stock trades at an attractive 1.5x FY27E price-to-book value (P/BV). Nuvama has reiterated its ‘Buy’ rating, raising the sum-of-the-parts (SOTP)-based target price to ₹413 (from ₹401 earlier).

 

“NTPC remains our top pick in Power Utilities given a likely 6% EPS CAGR over FY25–27E coupled with 17 per cent core RoE (~22GW capex—50:50 thermal/hydro cum RE) while still trading at an inexpensive 1.5x FY27E P/BV. Retain ‘Buy’ with an SotP-based TP of ₹413 (earlier ₹401), at 2.5x FY27E SA book + NTPC Green at a 30 per cent discount to CMP (₹105),” said Subhadip Mitra, Vikram Datwani, Mahir Moondra and Divyam Sureka of Nuvama, in a note dated October 30, 2025.

Steady quarterly performance

 

For the September quarter of FY26 (Q2FY26), NTPC’s standalone adjusted profit after tax (PAT) rose 7.5 per cent year-on-year (Y-o-Y) to around ₹4,500 crore, driven primarily by a sharp 66 per cent jump in other income and lower interest expenses, which are passed through in regulated tariffs. Operating performance was largely in line, though weak power demand led to a dip in plant load factor (PLF) to 66 per cent versus 72.3 per cent a year ago. This weighed on core RoE, which slipped to 14.4 per cent from 15.8 per cent Y-o-Y despite a 6 per cent rise in regulated equity.

 

On a consolidated basis, profit remained flat Y-o-Y at ₹5,230 crore as lower dividends from subsidiaries and joint ventures offset a notable improvement in subsidiary-level profits (₹1,150 crore vs ₹840 crore last year). Management guided that fixed cost under-recovery, which stood at ₹625 crore in the first half, should decline to ₹250 crore by Q4FY26.

Expansion momentum intact

 

NTPC’s group generation declined around 6 per cent Y-o-Y during the quarter due to subdued demand. However, capacity expansion remains on track with 33GW under construction (17.3GW thermal, 2.2GW hydro, and the rest renewable). The company has revised its commissioning guidance to 9.2GW for FY26 (2.8GW thermal, 1GW hydro, 5.4GW renewables) and about 10.5GW for FY27. Most upcoming projects are housed under subsidiaries or joint ventures, suggesting that consolidated earnings will capture most of the future growth. NTPC targets over 60GW of operational renewable capacity by FY32, up from 7.4GW as of September 2025. The company also declared an interim dividend of ₹2.75 per share for Q2FY26.

Foray into nuclear, storage

 

NTPC is expanding into nuclear power through its Ashvini JV with NPCIL, which is developing the 4×700MW Mahi Banswara project in Rajasthan. The foundation stone was laid in September 2025, with additional sites identified through state MoUs. The company’s pumped storage portfolio stands at 21.2GW, including 11GW directly under NTPC and 10.4GW through THDC and NEEPCO.

 

Additionally, NTPC has been allocated a 5,000MWh battery energy storage system (BESS) under the viability gap funding scheme to enhance thermal plant efficiency and ensure power supply during non-solar hours. The project, spread across 14 stations, will help optimise asset utilisation and reduce costs.

 

With a diversified expansion strategy, improving operational mix, and attractive valuations, NTPC remains Nuvama’s preferred bet in India’s power utilities space.