NTPC Seen Reaching Rs 450 Target: Prabhudas Lilladher Recommendation

NTPC Delivers Healthy FY26 Performance, Reiterates Capacity Addition Target

NTPC, one of India's largest power generation companies, has reported a strong FY26 performance with standalone adjusted Profit After Tax (PAT) at INR195 billion, registering an 8% year-over-year (YoY) growth. This improvement was driven by a 4% increase in regulated equity and a significant boost in coal plant Profit After Fuel (PAF) by 20 basis points to 90.1% in FY26. The company's core profitability remained robust, with implied FY26 core Return on Equity (RoE), excluding other income, increasing to 17.4% from 16.5% YoY, primarily due to better plant efficiency.

Key Highlights

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Looking ahead, NTPC has reaffirmed its annual capacity addition target of approximately 10 GW across FY27E–FY29E, with Non-Governmental Enterprise Limited (NGEL) targeting around 8 GW annually. The company's consolidated under-construction pipeline remains robust at 34 GW, up from 33 GW in the previous quarter. Additionally, NTPC has indicated an evolving nuclear investment strategy, aiming to contribute around 30% towards the Ministry of Power's 100 GW nuclear ambition by 2047.

Outlook and Recommendations

NTPC's regulated cost-plus model continues to provide stable RoE, predictable cash flows, and low earnings volatility, solidifying its position as a low-risk compounder rather than a high-growth story. The stock trades at 1.9x FY28E Book Value (BV), with an expected EPS Compound Annual Growth Rate (CAGR) of 7% over FY26-28E. Based on a Sum-of-the-Parts (SoTP) valuation, we maintain a BUY rating with a FY28E target price of INR450/share (previously INR423, factoring in the current market price of NGEL). Furthermore, NTPC offers a dividend yield of around 2.5%, supported by a dividend per share (DPS) of INR9 in FY26.