Shares of a prominent Maharatna thermal power company recently experienced a 2% increase following a positive assessment from Macquarie Group. This analysis highlighted the company’s significant growth potential, leading to an upward adjustment in its target price.
Price Variation
During Monday’s trading session, NTPC (National Thermal Power Corporation) Ltd’s shares rose to an intra-day high of Rs.359.30 per share, rising 2.3 percent from its previous closing price of Rs.351.30 apiece. The share price has retreated since then and is currently trading at Rs.357.55 per share. Over the past five years, the shares have delivered over 330 percent returns.
Rationale for Recommendation
Macquarie has assigned an ‘Outperform’ rating to NTPC, setting a price target of Rs.475 per share, suggesting a potential upside of approximately 33 percent from the current market price. The brokerage views NTPC as a strong play on India’s energy security and transition, benefiting from a mix of regulated capital expenditure and renewable energy exposure.
Macquarie also notes that the company’s predominantly brownfield thermal capacity additions minimize execution risks, and anticipates that nuclear power could serve as a future growth driver.
Capacity Enhancement
In the first nine months of FY25, NTPC added 640 MW of commercial renewable energy capacity, bringing its total commercial capacity to 59,168 MW (standalone) and 76,598 MW (group) as of December 31, 2024. Additionally, 135 MW of renewable energy and 660 MW of coal capacity from THDC India Limited are expected to be declared commercial soon.
NTPC has approved a Rs.1 lakh crore investment to expand its thermal capacity by 8 GW. Currently, the company has 30 GW of projects under construction, comprising 17.56 GW thermal, 2.2 GW hydro, and 10.3 GW renewable energy. Additionally, NTPC plans to increase coal production from 40 million metric tons (MMT) in FY25 to 67 MMT by FY29.
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Management Guidance
NTPC has outlined plans for substantial renewable energy growth, targeting 3,088 MW capacity addition in FY25, followed by 5 GW in FY26 and 8 GW in FY27. The company also aims to expand its thermal capacity through brownfield projects and upgrade existing facilities to address the rising energy demand in the future.
Earnings Report
According to its recent financial updates, NTPC Ltd reported remarkable consolidated revenue of Rs.45,053 crores in Q3 FY25, marking a 5 percent increase from Rs.42,820 crores in Q3 FY24. However, the company saw a slight decline in net profit to Rs.5,170 crores, compared to Rs.5,209 crores in the same period.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 10.16 percent and a Return on Equity (ROE) of 13.12 percent. Its Price-to-Earnings (P/E) ratio stands at 15.49, lower than the industry average of 44.53. Furthermore, the company maintains a current ratio of 1.61, a debt-to-equity ratio of 1.44, and an Earnings Per Share (EPS) of Rs.22.67.
Company Profile
NTPC Limited is India’s largest power utility, with an installed capacity of over 76,000 MW. The company primarily focuses on generating and distributing electricity while also diversifying into renewable energy and coal mining to sustainably support India’s energy requirements.
Written by – Siddesh S Raskar
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