NTPC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

📊 Financial Overview

• Profitability: PAT stable at ₹4,653 Cr; EPS at ₹20.5
• Margins: ROCE at 12.2%, ROE at 13.6% — solid efficiency for a utility PSU
• Debt Profile: Debt-to-equity ratio of 1.11 — moderately leveraged, typical for capital-intensive sector
• Dividend Yield: 2.48% — attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 16.4 — significantly below industry average of 30.9
• P/B Ratio: ~1.95 — reasonable given book value ₹173
• PEG Ratio: 2.26 — suggests valuation is slightly ahead of growth
• Intrinsic Value: Estimated around ₹360–₹380 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: NTPC is India’s largest power generation company, operating thermal, hydro, solar, and wind assets
• Moat: Government backing, long-term PPAs, and diversified energy portfolio
• Growth Drivers: Renewable expansion, green hydrogen, and international ventures

📌 Entry Zone Recommendation

• Suggested Entry: ₹320–₹335 — near DMA200 and RSI support zone
• Technical Indicators: RSI at 46.2 (neutral), MACD positive — mild bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; ideal for conservative investors seeking stable returns
• Monitor renewable capacity additions and debt management

✅ Positive

• Consistent profitability and dividend payout
• FII holding increased by 0.31%
• Strong EPS and undervalued relative to peers
• Strategic role in India’s energy transition

⚠️ Limitation

• High debt-to-equity ratio
• PEG ratio indicates valuation ahead of growth
• Flat quarterly profit growth

📰 Company Negative News

• Q2 FY26 PAT slightly declined due to higher fuel costs and lower thermal utilization

🌟 Company Positive News

• NTPC Green Energy merger expected to streamline renewable operations and unlock value
• New solar and hydrogen projects approved under government’s green energy mission

🏭 Industry

• Power utilities industry P/E at 30.9 — NTPC trades at a discount
• Sector driven by energy transition, infrastructure investment, and policy support

🧾 Conclusion

• NTPC is a stable, dividend-paying PSU with strong fundamentals and strategic importance
• Accumulate near support zones for long-term income and moderate capital appreciation