Axis Securities has initiated coverage on NTPC with a BUY rating, setting a target price of Rs 363 per share. The brokerage highlights the company's long-term earnings potential driven by a massive Rs 16.9 lakh crore capital expenditure plan, with a strategic focus on expanding its renewable energy and nuclear power capacity while maintaining stable returns from its core thermal power business.
Axis Securities Initiates Buy Rating on NTPC
Target Price set at Rs 363 per share with a projected 10% upside from current levels.
Reader Takeaway: NTPC offers long-term growth through massive renewable expansion while its regulated thermal business provides stable cash flows.
What just happened
Axis Securities has officially initiated coverage on state-run power major NTPC. The brokerage has issued a BUY rating, citing a robust structural shift in the company's business model. The target price of Rs 363 reflects confidence in NTPC's ability to transition from a traditional coal-based power generator to a diversified energy giant.
Why this matters
The core of this thesis lies in NTPC's massive 10-year capex plan, totaling Rs 16.9 lakh crore. Investors are seeing a pivot where nearly 70% of future investments are directed toward Renewable Energy (43%) and Nuclear power (27%). This transition is supported by a strong financial backbone, with a regulated return on equity of approximately 15.5% on its existing thermal asset base.
Business Strategy
NTPC is aggressively expanding its renewable energy subsidiary, NGEL, aiming to scale capacity from 12 GW currently to 136 GW by FY37. The company's thermal business remains highly efficient, with debtor days at 15—a significant outperformance compared to the industry average of 45 days. Future growth vectors also include a Rs 1 lakh crore green hydrogen hub and significant battery energy storage systems (BESS) projects.
Risks to watch
While the outlook is positive, the brokerage identifies key execution risks, primarily regarding the timeline for massive capacity additions. There is also potential sensitivity to the financial health of power distribution companies (discoms), which could affect receivables. Operational risks involve the volatility of Plant Load Factors (PLF) and Plant Availability Factors (PAF) across the aging thermal fleet.
What to track next
Investors should monitor the quarterly progress of NGEL capacity expansion and updates on the nuclear energy pipeline. Furthermore, any significant shifts in the debt-to-equity ratio as the company begins its peak capex cycle will be critical for long-term valuation assessments.