NTPC scales 52-week high after Q1 results; should you add shares to your portfolio?

NTPC shares scaled a 52-week high on Monday after the state-run power generation company reported a largely positive set of financial results for the April-June period. The stock of state-run power generation firm NTPC climbed by as much as Rs 8.9 or 4.2 per cent to Rs 218.9 apiece on BSE, surpassing a 52-week peak of Rs 210.4 touched on Friday.

The scrip settled four per cent higher at Rs 218.5 apiece on the bourse.

NTPC Q1 results

On Saturday, the company reported a 9.4 per cent year-on-year increase in standalone net profit to Rs 4,066 crore for the first quarter of the current financial year.

Its revenue, however, declined 2.3 per cent to Rs 39,122.3 crore compared with the corresponding period a year ago, according to a regulatory filing. 

NTPC reported a 16.7 per cent increase in earnings before interest, taxes, depreciation and ammortisation (EBITDA) to Rs 11,369.4 crore. 

Its margin — a key measure of profitability — improved by 480 basis points on a year-on-year basis to 29.1 per cent, according to the filing.   

According to Zee Business research, NTPC's quarterly net profit was estimated at Rs 3,896 crore, revenue at Rs 40,814 crore, EBITDA at Rs 11,062 crore and margin at 27.10 per cent. 

EDITOR'S TAKE | Strong profit growth on lower fuel costs

Zee Business Managing Editor Anil Singhvi pointed out that the stock has already run up sharply to 52-week highs ahead of the earnings announcement. He also highlighted that lower fuel costs aided the company's profitability in the three-month period. 

NTPC's fuel costs decreased 11 per cent on a year-on-year basis to Rs 22,850.3 crore for the June quarter. 

He sees support in NTPC shares at Rs 200 and a higher level at Rs 217 apiece.

Also read: Anil Singhvi's market strategy for the day

31st July Strategy: Results Review#NTPC #IDFCFIRSTBank #Marico #SBICards #UBL #piramalEnterprises #MCX #Q1FY24 #ResultsOnZee

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— CA Anil Singhvi Zee Business (@AnilSinghvi_) July 31, 2023

How analysts are reading NTPC Q1 results

According to CLSA, which maintained a 'buy' rating on NTPC after the power producer's earnings announcement, the company demonstrated improved quality in operations and financials in the June quarter, with a 609-basis-point rise in the availability of coal plants. 

The brokerage's target price implies an upside of more than 14 per cent from Friday's closing price. CLSA expects NTPC to expand its regulated equity by 22 per cent, driving its return on equity (RoE) higher by 180 bps by 2025.  

Zee Business analyst Kushal Gupta recommends buying NTPC shares from an investment perspective for a 12-month target of Rs 250 apiece. Check out his other recommendations

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