How National Green Hydrogen Mission could benefit NTPC - and what investors may do

State-run power generation firm NTPC is back in focus on Dalal Street with the Cabinet's nod last week to the Rs 19,744-crore National Green Hydrogen Mission, which aims to take India's green hydrogen capacity to at least five million tonnes a year by 2030. CLSA views NTPC as a key player in India’s entry into the global green hydrogen (GH2) market.

“If NTPC is able to secure a 15 per cent share of the GH2 market to reach 760k kgs by FY32CL, the business could add Rs14/share, or nine per cent, to its current market price,” the brokerage said in a research report.

The global green hydrogen market opens up an alternative avenue for NTPC to optimise the profitability of its green electrons, CLSA said.

The brokerage is of the view that India has a real chance to lead the GH2-driven energy transition globally, led by its natural competitive advantage, its commitments at the UN Climate Change Conference 2021 and the decarbonising of ‘hard-to-abate’ (HTA) emissions.

CLSA sees value in NTPC at nine times its estimated earnings per share (EPS) for 2024. It has a 'buy' call on NTPC with a target price of Rs 188 apiece -- implying upside potential of 13.3 per cent from Wednesday's closing price.

NTPC Share Price History

NTPC shares have growth more than 24 per cent in value in the past one year, sharply outperforming the benchmark Nifty50 index's two per cent decline. In the last six months alone, they have given investors a return of more than 12 per cent.

The NTPC stock is currently quoting at a nine per cent discount to its 52-week high of Rs 182.8, touched on November 1, 2022.

What National Green Hydrogen Mission really is

The government's plan for the renewable energy space is aimed at enabling the country become energy-independent and aid the decarbonisation of its economy's major sectors.

The plan will have wide-ranging benefits, including the creation of export opportunities for green hydrogen and its derivatives, the decarbonisation of industrial, mobility and energy sectors, a reduction in dependence on imported fossil fuels and feedstock, the development of indigenous manufacturing capabilities, job creation and the development of cutting-edge technology.