NTPCGREEN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.7

📊 Financials: NTPC Green shows weak fundamentals with ROE at 3.95% and ROCE at 6.42%, reflecting low efficiency. Debt-to-equity ratio of 0.42 is moderate, but earnings remain weak with EPS at only ₹0.65. PAT declined from ₹165 Cr. to ₹86 Cr., showing significant contraction despite a quarterly variation of -34.8%. Dividend yield is 0%, offering no income support.

💹 Valuation: Current P/E of 139 is extremely high compared to industry average of 26.7, suggesting overvaluation. Book value of ₹22.2 gives a P/B ratio of ~4.05, which is expensive relative to fundamentals. PEG ratio is unavailable, reflecting lack of growth visibility. Intrinsic value appears lower than current price, offering no margin of safety.

⚡ Business Model: NTPC Green focuses on renewable energy projects under NTPC’s umbrella, benefiting from government support and the push toward clean energy. Competitive advantage lies in parent backing and strategic positioning in India’s renewable energy transition, though profitability remains weak.

📈 Entry Zone: Current price ₹89.9 is near support at ₹84.6. Entry zone recommended only for speculative investors between ₹84–88. Long-term holding is not advised until earnings improve and valuations normalize.

Positive

• 📌 Backed by NTPC, India’s largest power producer
• 📌 Positioned in renewable energy, benefiting from government initiatives
• 📌 Moderate debt-to-equity ratio (0.42)
• 📌 52-week index gain of 9.98% shows sectoral resilience

Limitation

• ⚠️ Extremely high P/E (139) compared to industry average (26.7)
• ⚠️ Low ROCE (6.42%) and ROE (3.95%) indicate poor efficiency
• ⚠️ EPS at ₹0.65 reflects weak earnings
• ⚠️ Dividend yield is 0%, offering no income support
• ⚠️ Current price below DMA 50 (95.9 ₹) and DMA 200 (103 ₹), showing bearish trend

Company Negative News

• 📉 PAT declined sharply from ₹165 Cr. to ₹86 Cr.
• 📉 Decline in both FII (-0.06%) and DII (-0.03%) holdings

Company Positive News

• 📈 Parent NTPC’s backing ensures long-term project pipeline
• 📈 Strong positioning in India’s renewable energy transition

Industry

• ⚡ Renewable energy sector supported by government policies and climate goals
• ⚡ Industry P/E at 26.7 highlights NTPC Green’s overvaluation relative to peers

Conclusion

❌ NTPC Green is overvalued with weak profitability, low efficiency, and no dividend support. Entry only for speculative investors around ₹84–88. Long-term holding is not recommended until earnings improve and valuations align with industry benchmarks.

Would you like me to extend this into a peer benchmarking overlay comparing NTPC Green with other renewable energy companies, or a basket scan to identify safer compounding opportunities in the clean energy sector?