NTPCGREEN - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 3.2

NTPC Green Energy shows strong revenue growth and strategic importance in renewables, but its high valuation, low return metrics, and recent profit decline suggest caution. Long-term potential exists if execution improves and margins expand.

📊 Financial Overview

• Profitability: PAT dropped to ₹86 Cr from ₹165 Cr QoQ; EPS at ₹0.65
• Margins: ROCE at 6.42%, ROE at 3.95% — weak capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.42 — moderate leverage
• Dividend Yield: 0.00% — no income return for shareholders

📈 Valuation Metrics

• P/E Ratio: 159 — extremely high compared to industry average of 30.9

  Value Research

• P/B Ratio: ~4.6 — premium valuation relative to book value ₹22.2

  Value Research

• PEG Ratio: Not available — growth visibility unclear
• Intrinsic Value: Estimated around ₹85–₹90 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: NTPC Green Energy Ltd (NGEL) is a subsidiary of NTPC focused on renewable energy generation, including solar and wind assets
• Moat: Government backing, access to NTPC’s infrastructure, and strategic role in India’s green energy transition
• Growth Drivers: Expansion to 149 GW by FY32, new solar parks, and green hydrogen initiatives

  Business Today

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📌 Entry Zone Recommendation

• Suggested Entry: ₹90–₹95 — near intrinsic value and below DMA50
• Technical Indicators: RSI at 66.9 (approaching overbought), MACD positive — short-term momentum strong

📈 Long-Term Holding Guidance

• Hold cautiously; long-term potential depends on execution, margin expansion, and capacity ramp-up
• Ideal for ESG-focused portfolios with high risk tolerance

✅ Positive

• Q2 FY26 net profit up 135% YoY; revenue up 25% YoY

  Mint

• Backed by NTPC with access to capital and infrastructure
• FII and DII holdings relatively stable

⚠️ Limitation

• High P/E ratio of 159 and low ROE/ROCE
• No dividend payout
• QoQ profit decline of 34.8%

📰 Company Negative News

• Brokerages flagged subpar returns with 3 GW operating assets at 10x capex-to-EBITDA ratio

  Business Today

🌟 Company Positive News

• ICICI Securities rated NTPC Green Energy as “Add” post Q2 results, citing long-term potential

  Business Today

🏭 Industry

• Renewable energy industry P/E at 30.9 — NTPC Green trades at a steep premium

  Value Research

• Sector driven by energy transition, policy incentives, and ESG mandates

🧾 Conclusion

• NTPC Green Energy is a strategic renewable play with long-term potential but currently overvalued and margin-constrained
• Accumulate cautiously near support zones; monitor execution and profitability trends

Sources

Business Today

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