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On Wednesday, JPMorgan began its coverage of NTPC Ltd (NSE:NTPC:IN), one of India’s leading power companies, assigning an Overweight rating and a price target of INR 417.00. This initiation comes at a time when NTPC’s shares have experienced a significant decline, dropping 22% from their peak on September 24, in contrast to the NIFTY50 index’s 11% fall during the same period.
The Overweight rating suggests that JPMorgan sees potential in NTPC’s stock performance relative to the broader market. The price target is set in the context of the company’s current market valuation, which is trading at 1.6 times and 1.4 times its expected book value per share for fiscal years 2026 and 2027, respectively. This valuation also accounts for the value of NTPC Green Energy Limited, adjusted for a 40% holding company discount.
NTPC’s stock valuation reflects the company’s status as a solid regulated utility business, which is anticipated to generate a return on equity (RoE) of approximately 12% on book value. The firm is also recognized for its potential for growth, with around 17 gigawatts (GW) of thermal capacity under construction and an additional 7GW expected to be ordered in the near future.
JPMorgan’s coverage includes projections for NTPC’s consolidated earnings per share (EPS) and book value per share (BPS), with a compound annual growth rate (CAGR) of roughly 7% and 8%, respectively, from fiscal year 2024 to 2028. Furthermore, the firm acknowledges NTPC’s long-term growth prospects, including the expansion of NTPC Green Energy Limited’s renewable capacity and the company’s ventures into nuclear energy. These factors contribute to the positive outlook on NTPC’s stock.
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