HDFC Sec assigns 'Buy' tag to NTPC Green Energy, sees 22% upside; know why

The optimism stems from the company's aggressive capacity addition plans, supported by NTPC's established execution capabilities, which are expected to help it capitalise on rapidly growing demand

Analysts at HDFC Securities have turned bullish on the state-owned renewable energy player NTPC Green Energy and have initiated its coverage with a Buy rating on the scrip. The optimism stems from the company’s aggressive capacity addition plans, supported by NTPC’s established execution capabilities, which are expected to help it capitalise on India’s rapidly growing renewable energy demand.

 

The brokerage has set a target price of ₹121 per share, implying a potential upside of 22.22 per cent from the current level of ₹99. The valuation is based on 14.5 times its estimated FY29 Ebitda, discounted to present value at 12 per cent for a March 2028 target.

 

 

According to analysts Parikshit D Kandpal, Aditya Sahu, and Jay Shah, NGEL’s alignment with the government’s 500GW renewable energy target by FY30 offers a significant growth runway. A clear focus on profitable growth and disciplined capital allocation further strengthens its investment case. Strong parent support from NTPC, through its vision, resources, and deep industry expertise, also helps de-risk execution. NTPC Group’s target of achieving a 45–50 per cent non-fossil fuel portfolio and 60GW of renewable energy capacity by 2032 provides long-term visibility for NGEL’s growth pipeline.

 

“Collectively, these factors position NGEL favourably for sustainable scaling and the creation of long-term shareholder value. NTPC, via NGEL, aims to build and diversify its capabilities in emerging energy segments such as energy storage systems (ESS), green hydrogen, electrolysers, and green ammonia. These segments have witnessed strong industry participation in terms of capacity building and investments and are expected to contribute meaningfully to the Indian economy,” wrote the analysts in a note. 

Demand tailwinds remain strong

The brokerage highlighted that India’s growing population, expected to increase by around 300 million by 2060 as per UN estimates, along with rising per capita income and purchasing power, will drive higher energy demand. With India’s per capita GDP growing at a CAGR of 7–8 per cent since 2000 and expected to continue outpacing global growth, analysts believe power demand will rise significantly.

 

“Our analysis of per capita GDP and power consumption trends in developed economies suggests a 0.9–1.1x elasticity of power demand to GDP growth, which augurs well for Tier-I renewable energy developers,” the report noted. 

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Strong parentage, institutional trust

NGEL’s backing by NTPC provides a key competitive advantage, as it enjoys strong credibility with public sector undertakings, state governments, and financial institutions. This positions the company well to benefit from state support, joint ventures with public sector entities, and partnerships, including in the commercial and industrial (C&I) segment.

 

Its large-scale deployment plans make it an attractive capital deployment platform for lenders. Scale advantages are also expected to improve sourcing efficiency for raw materials and capital, both domestically and globally. Additionally, the ‘green’ energy theme offers access to relatively lower-cost global funding.

Execution strength and scalability

HDFC Securities further pointed out that NTPC (the parent company) has more than 50 years of experience (founded in 1975) in executing large-scale energy projects in India. NGEL is expected to benefit from its parent’s expertise to deliver better execution. "As large capacities continue to get commissioned, benefits may be accrued in the form of economies of scale, which could drive lower operating expenses per MW, while continuing to develop in-house expertise in the RE sector," said the brokerage.

 

NGEL is one of the largest renewable energy companies in India, and the brokerage believes that it is currently at the cusp of its growth inflection point. By 2032, NGEL is targeting a portfolio of operational capacity that exceeds 60GW, implying portfolio growth of more than 6–7x over the FY26E capacity.  ALSO READ: Top Gainer   |   Top Loser |  Stock Market LIVE

Growth outlook

HDFC Securities expects NGEL’s revenue and Ebitda to grow at a CAGR of 82 per cent between FY26E and FY29E, reaching ₹14,710 crore. The estimates assume stable solar and wind tariffs, consistent with trends observed over the past five years.

Key risks

The brokerage, however, has also flagged several risks, including a concentrated pool of utilities and off-takers, dependence on the availability and pricing of key equipment such as solar modules and wind turbines, and potential cost overruns or project delays.

 

Other risks include sensitivity to tariff and regulatory changes, exposure to seasonal and natural disruptions, delays in receivables from counterparties, long gestation periods for returns, and challenges related to the timely availability of power evacuation infrastructure.  =============================== 

(Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)