Shares of a Maharatna PSU Stock were in the green after a brokerage raised the company’s target price. At 11:31 AM on Thursday, its shares were trading at 191.95 apiece.
Government owned-power giant NTPC witnessed buying interest after global brokerage Goldman Sachs said that NTPC will benefit from India’s clean energy transition. It has a buy call on the company’s shares with a target price of ₹ 265 apiece which implies an upside of 38 percent as compared to its current share price.
The brokerage said that NTPC will benefit because of its ‘structural advantage’ of low-cost debt, which will provide a strong moat. Moreover, the company’s rising peak shortages will re-rate its legacy thermal business.
NTPC reported a 6 per cent decline in its consolidated net profit to ₹ 4,871.55 crore for the quarter that ended on March 31, 2023, against ₹ 5,199.55 crore logged a year ago. However, its total income in the quarter increased to ₹ 4,4745.74 crore from ₹ 37,724.42 crore a year ago. The company’s shares gained 14.5 percent in the past six months and 28.1 percent in the past year.
With a market capitalization of ₹ 1,86,709 crores, NTPC is a large-cap PSU company. It has a low return on equity of 11.98 percent and a high dividend yield of 2.99 percent. Its shares were trading at a price-to-earnings ratio (P/E) of 11.04, which is lower than the industry P/E of 16.04, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 51.10 percent stake in it followed by mutual funds with 20.10 percent, foreign institutions with 15.78 percent, other domestic institutions with 8.31 percent and retail and other investors with 4.71 percent.
Written by Simran Bafna
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