Pick of the week - NTPC Ltd

Mumbai, 4 November 2025: HDFC Securities this week recommends NTPC Limited (NSE: NTPC), India’s largest integrated power utility, playing a pivotal role in ensuring the nation’s energy security and supporting its green transition. With a base case fair value of ₹370 and a bull case fair value of ₹395 over the next 2–3 quarters, HDFC Securities suggests buying the stock in the ₹338–₹334 band and adding on dips at ₹322-₹316.

Q2FY26 Performance: Stable Operations Amid Energy Transition

NTPC reported a steady Q2FY26 with improving operational metrics and rising contribution from renewables despite lower thermal generation.

• Revenue stood at ₹44,785 crore, growing 0.2% YoY, supported by higher fixed charges.
• EBITDA increased 9.9% YoY to ₹12,816 crore, reflecting better fuel cost efficiency.
• PAT declined marginally by 2.9% YoY to ₹5,225 crore, impacted by higher depreciation and lower JV income.
• Average Tariff for H1FY26 improved to ₹4.90/kWh from ₹4.67/kWh in H1FY25.
• Receivable days reduced from 33 to 28 days, highlighting improved collection efficiency.

While thermal PLFs moderated to 66% due to grid restrictions, solar and hydro segments recorded healthy utilisation, with hydro PLFs reaching over 100%.

Strategic Growth and Key Drivers

1. Leadership in Power Generation
   • NTPC addresses nearly 24% of India’s power demand and contributes 17% of the nation’s installed capacity.
   • The company operates 84.1 GW of capacity and has 33 GW under construction, spanning coal, hydro, and renewables.
   • The management’s roadmap targets 149 GW by FY29 and 244 GW by 2037, underscoring its leadership in energy infrastructure.
2. Strong Push Toward Renewables and Green Hydrogen
   • Renewables to account for ~130 GW by 2037, marking NTPC’s shift toward low-carbon energy.
   • Multiple green hydrogen projects are in progress, including India’s first hydrogen-based microgrid in Ladakh and hydrogen-fuelled locomotives.
   • NTPC is also investing in Carbon Capture, Utilisation and Storage (CCUS) and green chemicals, expanding its clean energy ecosystem.
3. Diversification into Nuclear and Energy Storage
   1. Recently awarded the 2.8 GW Mahi Banswara Nuclear Power Project, enhancing NTPC’s portfolio diversity.
   2. Developing 12.67 GW of Pumped Storage Projects (PSPs) and a 5 GWh Battery Energy Storage System (BESS) to strengthen grid stability and energy storage capabilities.
4. Long-Term PPAs Ensure Revenue Visibility
   • Over 90% of NTPC’s thermal and hydro capacity operates under long-term, cost-plus PPAs, securing predictable returns.
   • The CERC 2024–2029 tariff regulations remain favourable, maintaining RoE and offering incentives for off-peak power supply.
   • Renewable projects under NTPC Green Energy Ltd (NGEL) are also largely covered under long-term PPAs, ensuring cash flow stability.
5. Substantial Capex and Financial Strength
   • NTPC plans a ₹7 lakh crore capex by FY2032, with a balanced focus on renewables, nuclear, and thermal upgrades.
   • Net Debt/EBITDA expected to fall from 4.4x in FY25 to 3.8x by FY28, with Debt/Equity maintained at 1.3–1.4.
   • Robust balance sheet and disciplined execution offer long-term visibility and sustainable growth.

Valuation & Recommendation

HDFC Securities’ Estimates:

• Base Case Fair Value: ₹370 (2.2x FY27E Regulated Equity)
• Bull Case Fair Value: ₹395
• Time Horizon: 2–3 quarters

Recommendation: Buy within the ₹338–₹334 band and accumulate on dips at ₹322–₹316. NTPC’s expanding renewable footprint, disciplined capex execution, and improving returns underpin a strong investment case.

Risks & Considerations

• Execution Delays: Slow project clearances or transmission bottlenecks could defer capacity additions.
• Counterparty Risk: State DISCOMs’ weak financials may affect payment timelines, though mitigated by tripartite agreements with the RBI and GoI.
• Regulatory Changes: Any unfavourable policy shift in tariffs or renewable norms could impact earnings.
• Fuel Supply Dependence: Thermal segment still exposed to fluctuations in domestic coal availability.

HDFC Securities’ View

NTPC Limited continues to strengthen its position as India’s most reliable power producer while transitioning into a diversified, sustainable energy leader. With expanding renewable capacity, consistent financial performance, and clear visibility on long-term growth projects, NTPC remains well-poised to benefit from the country’s rising energy demand and clean energy momentum.

For investors seeking stable returns and long-term growth potential in India’s evolving power sector, NTPC Limited stands out as HDFC Securities’ Pick of the Week.

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.