Analysts recommend 'Buy' on NTPC post Q3 on strong outlook; details here

The State-owned company NTPC’s December quarter of financial year 2025 (Q3FY25) results were a mixed bag. On the positive side, the company’s consolidated earnings before interest, tax, depreciation and amortisation (Ebitda) climbed 20.3 per cent year-on-year (Y-o-Y) to Rs 13,667.1 crore, as against Rs 11,362.2 crore in Q3FY24. 

 

Ebitda margin, too, expanded 380 basis points (bps) to 30.3 per cent in Q3FY25, from 26.5 per cent in Q3FY24. 

 

However, on the downside, NTPC’s profit saw a slight decline, falling 0.75 per cent year-on-year to Rs 5,169.7 crore, from Rs 5,208.9 crore in Q3FY24. Revenue growth was also relatively subdued, with a 5.2 per cent increase at Rs 45,052.8 crore in Q3FY25, from Rs 42,820.4 crore in Q3FY24.

 

 

NTPC also declared a second interim dividend of Rs 2.5 per share for FY25. The company has set January 31, 2025, as the ‘Record Date’ for the dividend.

 

On the bourses, NTPC share price dropped as much as 2.84 per cent, hitting an intraday low of Rs 314.50 per share.

 

Considering these factors, most brokerages have maintained a Buy/Outperform rating on a strong outlook.

 

Nuvama said NTPC’s Q3 standalone adjusted PAT grew 6 per cent Y-o-Y, in line with the rise in regulated equity, implying a core RoE of 17.5 per cent compared to 18.6 per cent in Q3FY24. Consolidated adjusted PAT was flat Y-o-Y due to a high base of other income in subsidiaries, including interest on IT refunds. Fixed cost under-recovery improved 33 per cent in 9M FY25 compared to Rs 760 crore in H1. 

 

Given this, analysts expect a strong Q4 performance, driven by high PLF incentives and falling under-recoveries. 

 

Despite a 10 per cent EPS CAGR over FY24–27, analysts at Nuvama retain NTPC as their top pick in Power Utilities on its inexpensive valuations (1.5x FY27 P/BV). The 23GW thermal/RE capex and potential rising CERC incentives support the outlook. 

 

“Maintain ‘Buy’ with a revised TP of Rs 412 at 2.5x FY27E SA book and NTPC Green at a 30% discount to CMP,” Nuvama said.

 

Those at InCred Equities noted that NTPC’s 25GW brownfield thermal expansion ensures base-load stability, with industry-leading PLF at 77.25 per cent. An additional 8.8GW is expected to be awarded in FY25. 

 

Moreover, NTPC, along with NGEL, aims to scale its renewable capacity by 20x to 60GW by FY32 from 3.3GW, with an approximately 89 per cent Ebitda margin from long-term 25-year PPAs. 

 

“We initiate coverage on NTPC with an ‘Add’ rating and a SOTP-based target price of Rs 385 as a proxy play on India’s 900GW energy transition,” analysts at InCred Equities said.

 

Similarly, Jefferies reportedly maintains a ‘Buy’ rating on NTPC, setting a target of Rs 500 per share. While the Q3 results missed expectations, the firm anticipates a strong Q4, with capacity ramp-up driving medium-term growth.

 

Bernstein, meanwhile, retained an ‘Outperform’ rating on NTPC, with a target of Rs 440 per share. CLSA, too, maintained an ‘Outperform’ rating on NTPC, with a target price of Rs 459.

Motilal Oswal

 

According to Motilal Oswal, NTPC’s standalone Ebitda for Q3FY25 came in 2 per cent above their estimates, though adjusted PAT was below expectations due to a higher-than-expected tax rate and adjustments from the previous year. 

 

Profitability at the PAT level was also impacted by adverse movements in regulatory deferral account balances of Rs 360 crore. 

 

Overall execution remains slow, and conventional capacity commissioning targets have been downgraded to 2.1/2.2GW in FY25/FY26 from the earlier guidance of 2.7/4.0GW. At the NGEL level, only 0.5GW has been commissioned in 9MFY25, versus the FY25/26 guidance of 3/5GW. 

 

Analysts also note that NGEL is already trading at the higher end of the 10-15x FY27 EV/Ebitda for RE generation players, and execution delays could lead to a potential de-rating. Thus, they value NTPC Green at Rs 65 per share, applying a 25 per cent discount to its current market price. Analysts reiterate their ‘Neutral’ rating with a target price of Rs 366.

 

JM Financial highlights that NTPC reported a 2 per cent growth in generation, which was in line with expectations due to moderate energy and peak power demand during Q3FY25. The thermal PLF remained flat at 75.98 per cent versus 75.95 per cent in 3QFY24. As a result, overall performance during Q3FY25 was soft, with revenue of Rs 45,000 crore, reflecting a 5 per cent Y-o-Y growth, in line with estimate but down 3 per cent compared to consensus.

 

RE capacity addition also remained below expectations, with only 640 MW added in 9MFY25, although management has maintained its guidance of 3/5/8 GW RE additions for FY25/FY26/FY27. 

 

Analysts note that the thermal project ordering is progressing, but with the bunching of projects, they remain cautious about capacity additions in FY25 and FY26. 

 

“We maintain our ‘Buy’ rating on the stock with a revised target price (TP) of Rs 359 (earlier Rs of 471) valuing at 2.3x Dec’26 Regulated Equity of thermal business and 14x Dec’26 Ebitda of RE business,” JM Financial said, in a note.