Brokerage house Motilal Oswal has maintained a 'Neutral' rating on NTPC with a price target of Rs 360. While the state-owned power producer reported revenue and profit figures that beat market estimates in the second quarter of fiscal year 2027, concerns over renewable energy capacity delays and margin compression have tempered the outlook.
Brokerage firm Motilal Oswal has kept its 'Neutral' stance on NTPC, assigning a target price of Rs 360 per share. The assessment follows the company's second-quarter earnings report for the fiscal year 2027, where the state-owned utility displayed a mix of strong headline numbers alongside underlying operational challenges.
NTPC’s standalone revenue for the quarter stood at Rs 458 billion, which was 11% higher than market estimates. Profit figures also surpassed projections, with Adjusted Profit After Tax (APAT) reaching Rs 53.4 billion—a 14% beat against analyst expectations. However, the brokerage noted that this profit strength was largely supported by regulatory deferral income, rather than purely from core operational growth. This means that accounting adjustments allowed by regulators provided a boost to the bottom line, which may not repeat in future quarters.
On the operational side, NTPC maintained steady coal plant performance, with a Plant Load Factor (PLF) of 75.11% recorded for the first half of the fiscal year. Despite this stability, core profitability faced pressure. The company reported an EBITDA of Rs 109 billion for the quarter, with margins contracting by 180 basis points year-on-year to 23.8%. This reduction in margins reflects the ongoing cost and competitive pressures the utility company is navigating.
A significant area of concern identified by the brokerage is the pace of the renewable energy transition. NTPC has reduced its renewable capacity addition guidance for fiscal year 2027 from 8 gigawatts (GW) to 6.5 GW. This downgrade is primarily linked to challenges in commissioning projects, with transmission constraints emerging as a major hurdle. Such delays in the renewable sector can impact the company's long-term growth strategy.
The brokerage maintains a cautious view, suggesting that the stock's current market valuation offers limited room for significant upside. For shareholders and potential investors, the primary monitorables will be the company's ability to resolve transmission bottlenecks and accelerate the commissioning of its renewable energy projects under its NGEL subsidiary. Additionally, observing margin trends in the core thermal business will be essential to gauge future profitability and operational efficiency.