Shares of NTPC and Power Grid Corporation are among the most tracked stocks of public ltd firms in the power sector. The stocks which are also considered as defensive bets currently trade near the affordable price of┬а Rs 200 per scrip. While NTPC stock is trading at Rs 162 level, Power Grid scrip is at Rs 208 in late morning deals.
In terms of returns, NTPC stock has gained 12 per cent in a year and risen 30.27 per cent this year. On the other hand, Power Grid stock has gained 7.57 per cent in a year and risen 1.84 per cent this year. NTPC stock is trading 36.19 per cent higher from the 52-week low of Rs 118 hit on December 27, 2021. The stock hit a 52-week high of Rs 176.15 on September 15, 2022. On the other hand, shares of Power Grid have climbed 15.36 per cent from their 52 week low of Rs 180.30 on December 12, 2021. The stock hit a 52 week high of Rs 248.25 on May 10, 2022.
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Shareholding Pattern
NTPC
In Q1 of the current fiscal, 9.90 lakh public shareholders held 48.90 per cent stake or 474.13 crore shares in Power Grid. One promoter held 51.10 per cent stake or 495.53 crore shares in the June quarter. 9.64 lakh public shareholders held 17.56 crore shares of the firm, amounting to a stake of 1.81 per cent with an individual share capital of up to Rs 2 lakh.
397 public shareholders held 2.44 crore shares of the firm, amounting to a stake of 0.25 per cent with an individual share capital of over Rs 2 lakh. 36 mutual funds held 18.05 per cent stake or 175.05 crore shares in the firm at the end of June quarter. 576 foreign portfolio investors owned 14 percent stake or 135.78 crore shares in the firm at the end of Q1.
Power Grid
In Q1 of the current fiscal, 7,90,530 public shareholders held 48.66 per cent stake or 339.42 crore shares in Power Grid. Two promoters held 51.34 per cent stake or 358.11 crore shares in the June quarter. 7,78,510 public shareholders held 17.18 crore shares of the firm, amounting to a stake of 2.46 per cent with an individual share capital of up to Rs 2 lakh. 229 public shareholders held 1.28 crore shares of the firm, amounting to a stake of 0.18 per cent with an individual share capital of over Rs 2 lakh. 35 mutual funds held 8.44 per cent stake or 58.86 crore shares in the firm at the end of June quarter. 1048 foreign portfolio investors owned 30.25 percent stake or 210.97 crore shares in the firm at the end of Q1.
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Earnings report
NTPC
In first quarter of the current fiscal, NTPC reported a 15.50 per cent year-on-year (YoY) rise in consolidated net profit at Rs 3977.7 crore against profit of Rs 3443.72 crore in the corresponding quarter last year. On a sequential basis, profit fell 23 per cent YoY from Rs 5,199.51 crore posted at the end of March 2022 quarter. In the March quarter of previous fiscal, NTPC reported a rise of 25.5 per cent in its standalone net profit at Rs 5,622 crore against a profit of Rs 4,479 crore in the year-ago period. March quarter revenue from operations increased 23.8 per cent to Rs 32,905 crore as against Rs 26,567 crore a year ago.
Power Grid
Power Grid Corporation of India reported a 36.2 per cent YoY decline in June quarter profit to Rs 3,801.19 crore against Rs 5,998.28 crore in the year-ago period. The PSU’s Q1 revenue from operations, however, rose 6.7 per cent YoY to Rs 10,905.21 crore.
It posted a 18 per cent rise in consolidated net profit at Rs 4,156.44 crore for the March 2022 quarter, backed by higher income. The company’s consolidated net profit stood at Rs 3,526.23 crore in the year-ago quarter. Total income during January-March quarter rose to Rs 11,067.94 crore compared to Rs 10,816.33 crore recorded in the corresponding period of FY21.
Here’s a look at what experts said about the better stock pick among the two power producers.
Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking is of the opinion that Power Grid stock has bottomed out and can be a better pick for investors.
“Since March 2020, both NTPC and Power Grid witnessed a steady and gradual rise in price. However, NTPC has underperformed compared to Power Grid in the last few years. For the past 2-2.5 years in a row, both the stocks on technical parlance had been heading higher amidst the upward rising channel line. However, recent price correction at higher levels in Power Grid has offered a favourable risk-reward scenario in comparison to NTPC.
On the oscillator front, both the stocks on the weekly time frame are trading in neutral price reading above 50. However, presence of Class A divergence in NTPC indicates correction is likely to come in due course while in case of Power Grid, positive divergence in daily chart implies immediate blip might have ended and pullback in prices can be seen hereon. Recent correction in Power Grid on technical parlance can be rationalised due to the presence of bearish ‘Harmonic Sea Pony’ pattern against which prices were likely to correct to the extent of 150-161.8% retracement of the entire outline which comes around 184-188. Price of Power Grid corrected exactly to that extent.
Hence, it can be concluded that the stock has bottomed out and upside rally hereon can be expected. The volume trend has shown an accumulation in Power Grid for the past few days, thus indicating an increased enthusiasm to push prices higher while the latter lacks volume participation. Power Grid might witness a strong up move and head initially towards immediate swing high of September 22 i.e. at Rs 235 followed extend projected retracement of the Sept 2022 decline (238-186) at┬а Rs 250.”
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Ravi Singhal, CEO,GCL said, “As we see in the long-term, both stocks look good. Power Grid controls almost 75 per cent of grid without which transmission is not possible. On the other hand, 70 per cent of the electricity is produced by NTPC. Both are very important and without both companies, economic growth is not possible. Margins of Power Ggrid are very high compared to NTPC. But the government is planning to merge some other listed and unlisted companies in NTPC to make one of the largest power arm of India. NTPC is also focusing on alternative energy sources, which will make it one of the largest alternative energy producer in the coming years. Both have good history of dividend payments. Both stocks look good for long term. NTPC can be bought with a stop loss of Rs 155 for a target of Rs 195.┬а Shares of Power Grid can be bought with a stop loss of Rs 195 for a target of Rs 245 to Rs 270.”
Manoj Dalmia, founder and director, Proficient Equities said, “NTPC looks better on a technical note and it has recently formed a new high. Investors can expect a target of around Rs 200 from the current price levels. Investors with a little longer term perspective can pick this stock. Power Grid looks positive in a short-term horizon and we can have a 12 percent upside from the current levels as a strong volume spike is seen at the current levels.”
Ravi Singhal, CEO,GCL said, “As we see in the long-term, both stocks look good. Power Grid controls almost 75 per cent of grid without which transmission is not possible. On the other hand, 70 per cent of the electricity is produced by NTPC. Both are very important and without both companies, economic growth is not possible. Margins of Power Ggrid are very high compared to NTPC. But the government is planning to merge some other listed and unlisted companies in NTPC to make one of the largest power arm of India. NTPC is also focusing on alternative energy sources, which will make it one of the largest alternative energy producer in the coming years. Both have good history of dividend payments. Both stocks look good for long term. NTPC can be bought with a stop loss of Rs 155 for a target of Rs 195.┬а Shares of Power Grid can be bought with a stop loss of Rs 195 for a target of Rs 245 to Rs 270.”
Manoj Dalmia, founder and director, Proficient Equities said, “NTPC looks better on a technical note and it has recently formed a new high. Investors can expect a target of around Rs 200 from the current price levels. Investors with a little longer term perspective can pick this stock. Power Grid looks positive in a short-term horizon and we can have a 12 percent upside from the current levels as a strong volume spike is seen at the current levels.”
Abhijeet from Tips2trade said, “After a rough September which saw stocks correcting by almost 10-15%, both Power Grid & NTPC are currently looking good for a strong uptrend. Power Grid looks better & a daily close above Rs 211 could lead to a target of Rs 240-250 in the near term. NTPC needs to close above Rs 165 on daily charts to reach up to Rs 176-188 in the near term.”
Jitendra Upadhyay, Sr. Research Analyst, Bonanza Portfolio said, “Both companies are aiming to expand more and more, in which Power Grid sees 25-32% upside potential in FY23 with a targeted capex of Rs 80 bn. Power Grid has 40% market share in Tariff Based Competitive Bidding (TBCB). In Q4FY22 TBCB bid pipeline has risen 2.9x from Rs 108 bn in Q1FY22 to Rs 319 bn which help to raise the Power Grid target capex by Rs 100-106 bn. This addition will also add value to Rs 270 bn Ladakh projects. Total estimates of Power Grid capex is estimated at Rs 490 bn for FY23-25 which was 6% higher than FY20-22 capex. For NTPC, it is expected that by FY23-24, NTPC is going to commercialise 4.7GW/6.0GW. This will increase the regulated equity to Rs 822 bn vs Rs 709 bn in FY22. Further, it has 10GW of thermal projects and 2.3GW of hydro projects under construction. NTPC has also planned to add 6GW of brownfield coal capacity for a capex of Rs 600 bn.”
“NTPC aims to reach 60GW RE by FY32 to complete this target NTPC has signed MOU with the Rajasthan government to set up 10 GW as a part of its 60 GW plan. NTPC has mentioned that 1GW of its 15GW target could see a 12 months delay due to volatility in prices of modules and some COVID impact.┬а NTPC and Power Grid enjoy a lot of benefits because of government inclusion in the stake and enjoy access to the lowest cost funding and other subsidies. On the valuation front, in comparison with an industry PE of 30.5 times, both companies are trading at PE of 9-10x which shows huge potential for both companies to grow more. As the power sector is capital intensive. If we compare NTPC & Power Grid on EV/EBITDA front it is also ranging somewhere in between 7.5-8x. With this, we remain at a positive stance in the long term,” he added.
