NTPC shares: Post 64% rally in six months, the stock has further re-rating potential; here’s why

Shares of country’s largest power producer NTPC Ltd have surged 64% in the last six months. The power stock, which is trading near its record high, is a good potential buy, according to Axis Securities. The brokerage has initiated coverage on the NTPC stock with a target price of Rs 345.  

The stock has further rerating potential is possible if the peak deficits increase in future and from value unlocking through the green energy IPO. 

The broad-based economic recovery and infrastructure growth have led to a rise in peak demand, surging to new highs in FY24. An increase in demand, particularly during non-solar hours, has led to a resurgence of peak deficits, once again bringing the sector into the spotlight, said the brokerage.  

NTPC has a substantial portfolio in conventional power, with a firm cost-plus business model. This positions NTPC well in a growing peak power cycle. The structure will contribute to stable cash flows and will facilitate growth led by renewable energy, added Axis Securities.  

In terms of technicals, the relative strength index (RSI) of  NTPC stock stands at 62, signaling it's neither trading in the overbought nor in the oversold zone. The stock has a beta of 0.3, indicating low volatility in a year. NTPC shares stand lower than the 5 day, 10 day but higher than the 20 day, 50 day, 100 day and 200 day moving averages.    

In the previous session, NTPC shares ended flat at Rs 312.65 against the previous close of Rs 312.90 on BSE. Earlier, NTPC stock opened higher at Rs 315 on BSE. NTPC shares have gained 88.51 per cent in one year. Market cap of NTPC stood at Rs 3.03 lakh crore on BSE. Total 9.33 lakh shares of the firm changed hands amounting to a turnover of Rs 29.11 crore.   

The stock hit a 52-week low of Rs 162.65 on February 3, 2023 and surged to a record high of Rs 325.60 on January 5, 2024.

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