NTPC Shares Slip on Mixed Q2 Earnings; Brokerages Divided on Future Outlook

State-run power giant NTPC Limited saw its share price decline by over 2% following the announcement of its Q2FY26 results. The company reported a consolidated net profit of Rs 5,067 crore, marking a 3.9% decrease from the previous quarter. Standalone revenue for the quarter stood at Rs 39,200 crore, with EBITDA reaching Rs 10,000 crore. Profit after tax (PAT) was Rs 4,650 crore, while adjusted PAT showed an 8% year-on-year and 2% quarter-on-quarter increase, reaching Rs 4,500 crore.

Brokerage firm Motilal Oswal maintained a 'Neutral' rating with a target price of Rs 372, citing that adjusted PAT was above estimates due to higher other income, but EBITDA missed forecasts due to weak power demand affecting generation. The brokerage expressed caution regarding project execution, particularly at NTPC Green Energy, and noted limited room for re-rating in its valuations.

Conversely, Nuvama Institutional Equities reiterated its 'Buy' rating with a higher target price of Rs 413. Nuvama highlighted NTPC's projected 6% EPS compound annual growth rate over FY25-FY27, a 17% core return on equity, and an attractive 1.5x FY27E price-to-book value. They also noted NTPC's strategic expansion into nuclear energy with projects like the Mahi Banswara Atomic Nuclear project, a significant pumped storage portfolio, and Battery Energy Storage Systems (BESS).

Impact This news has a moderate impact on NTPC's stock price and investor sentiment, reflecting the mixed financial performance and divergent analyst outlooks. The stock may experience continued volatility as investors weigh the earnings report against future growth prospects and execution risks. Rating: 6/10

Difficult terms explained: Consolidated net profit: Total profit of the company and its subsidiaries after all expenses and taxes. QoQ (Quarter-on-Quarter): Comparison of performance between the current quarter and the immediately preceding quarter. Standalone revenue: Revenue generated by the company itself, excluding its subsidiaries. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation): A measure of a company's operating performance, excluding financing, tax, and non-cash expenses. PAT (Profit After Tax): The profit remaining after deducting all expenses, including taxes. Adjusted PAT: Profit after tax adjusted for certain extraordinary or non-recurring items to provide a clearer picture of core operational profitability. YoY (Year-on-Year): Comparison of performance between the current period and the same period in the previous year. Target Price: The price level at which a stock analyst expects the stock to trade within a specific timeframe. Upside Potential: The difference between the current stock price and the target price, indicating expected gains. Project Execution: The process of successfully completing a planned project according to its objectives and timeline. Sum-of-the-parts (SOTP) Valuation: A valuation method where the total value of a company is calculated by summing up the values of its individual business segments or assets. Re-rating: A change in the market's valuation of a stock, often due to improved or deteriorated fundamentals or market sentiment. EPS (Earnings Per Share): The portion of a company's profit allocated to each outstanding share of common stock. CAGR (Compound Annual Growth Rate): The mean annual growth rate of an investment over a specified period of time longer than one year. RoE (Return on Equity): A measure of a company's profitability relative to its shareholders' equity. P/BV (Price-to-Book Value): A valuation ratio that compares a company's market capitalization to its book value. MoUs (Memoranda of Understanding): Preliminary agreements between parties outlining their mutual intentions. BESS (Battery Energy Storage Systems): Technologies used to store electrical energy generated from various sources.