Utilities · investment research
NTPC
NTPC
Verdict
WATCHLIST
medium confidence · 3-5 years
Composite score
49/100
Weighted across all eight pillars
Business quality
60/100
Moat, returns, balance sheet, cash, management
Valuation score
27/100
At 66.9x against a sector median of 66.9x, the price embeds roughly 49% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
Good business, wrong price. Track it and wait for a better entry.
WHY
- • Balance sheet scores 94/100 (improving) — Leverage is serviceable from current cash generation.
- • Growth quality scores 15/100 (deteriorating) — Top-line compounding over the reported history.
- • Valuation scores 27/100 (stable) — At 66.9x against a sector median of 66.9x, the price embeds roughly 49% earnings growth. Anything less has to come out of the multiple.
- • Cash conversion scores 71/100 (stable) — Reported profit is backed by operating cash.
WHERE
Utilities · Large cap · position sized to at most 0% of an equity portfolio.
WHEN
Revisit if the price approaches ₹360 or earnings catch up with the multiple.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 14% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹360 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: No material flags — No leverage, cash-conversion, pledge or governance flags in the sample data.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check GDP growth — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
NTPC is a competitively exposed utilities business compounding revenue at 6.2% and profit at -7.8%, earning 17.9% on capital. Quality scores 60/100 and valuation 27/100 at 66.9x. The decision is therefore watchlist with medium confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
NTPC operates in the Indian utilities sector with a large-cap footprint and a listed market value of about ₹337k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 25/100
Brand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
Segment mix
Growth 20.6% · margin 22.8% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 2.4% · margin 14.3% — Growing broadly in line with the overall business.
Growth 23% · margin 33.9% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 12.6% · margin 13.7% — Growing broadly in line with the overall business.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
32/100Trend: deteriorating · weight 14%
- MoatBrand & distribution
Shelf presence and recall let the company hold price through input cost cycles.
- Segment concentrationThermal generation is 36.2% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin17.0%
Margin moved from 31.0% to 17.0% year on year.
Profitability & returns
58/100Trend: deteriorating · weight 16%
- ROCE17.9%
ROCE was 19.7% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE21.3%
Return on equity after leverage — read alongside debt levels.
- Net margin8.0%
Share of every rupee of revenue that reaches reported profit.
Growth quality
15/100Trend: deteriorating · weight 15%
- Revenue CAGR (4y)6.2%
Top-line compounding over the reported history.
- Profit CAGR (4y)-7.8%
Profit lags revenue, so growth is being bought with margin.
- Growth sourceCapex-led (organic)
Capex is 13.0% of revenue this year.
Balance sheet
94/100Trend: improving · weight 12%
- Debt / EBITDA0.22x
Leverage is serviceable from current cash generation.
- Debt / equity0.11x
Capital structure relative to shareholder funds.
- Working capital90 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
71/100Trend: stable · weight 13%
- OCF / PAT122%
Reported profit is backed by operating cash.
- Free cash flow₹-3,506 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
43/100Trend: improving · weight 14%
- Guidance delivery50% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding9.4% (+1.78 y/y)
Promoter ownership is stable or rising.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII -1.81 · DII +0.41
Direction of institutional ownership over the last year.
- Capital allocationSurplus cash is largely returned to shareholders…
Surplus cash is largely returned to shareholders rather than reinvested.
Industry & macro
59/100Trend: stable · weight 8%
- Demand trendstable
Utilities (India) demand is stable.
- StructureConsolidated
Consolidated — a few large players hold most of the profit pool.
- Competitive intensitymedium
How hard it is to keep pricing and share.
- Macro driversGDP growth, Inflation, Interest rates
Variables that move the earnings base regardless of company execution.
Valuation
27/100Trend: stable · weight 8%
- P/E vs sector66.9x vs 66.9x
At 66.9x against a sector median of 66.9x, the price embeds roughly 49% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted66.90 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield-1.04%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹84,887 Cr | ₹22,919 Cr | ₹11,918 Cr | ₹13,587 Cr | ₹10,192 Cr | 18.1% |
| FY2023 | ₹90,616 Cr | ₹25,372 Cr | ₹13,447 Cr | ₹15,599 Cr | ₹11,974 Cr | 19.7% |
| FY2024 | ₹96,346 Cr | ₹14,452 Cr | ₹8,093 Cr | ₹9,550 Cr | ₹879 Cr | 25.8% |
| FY2025 | ₹1.02 L Cr | ₹31,644 Cr | ₹15,189 Cr | ₹18,227 Cr | ₹5,978 Cr | 19.7% |
| FY2026 | ₹1.08 L Cr | ₹18,327 Cr | ₹8,614 Cr | ₹10,509 Cr | ₹-3,506 Cr | 17.9% |
No accounting-quality flags in the sample data.
Ownership & management
Who owns it, and have they delivered?
Promoter
9.4%
+1.78 y/y
Pledge
None
No disclosed pledge
FII
11.7%
-1.81 y/y
DII
14.8%
+0.41 y/y
Guidance delivered in 50% of the last eight quarters; average leadership tenure 4 years.
Surplus cash is largely returned to shareholders rather than reinvested.
No governance flags raised by the sample dataset.
Industry & macro context
Utilities (India)
Demand trend
stable
Cyclicality
low
Competition
medium
Regulatory pressure
low
Consolidated — a few large players hold most of the profit pool.
Macro drivers: GDP growth · Inflation · Interest rates
Valuation
fair versus the sector
P/E
66.9x
Sector median P/E
66.9x
P/B
12.55x
Earnings yield
1.49%
FCF yield
-1.04%
PE / growth
66.9
Estimated fair-value band ₹360 – ₹461 , built on FY2026 EPS of ₹8.9. Gap to the current price: +18%. Ranges are a modelling output, not a target price.
At 66.9x against a sector median of 66.9x, the price embeds roughly 49% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- No material flagslow
No leverage, cash-conversion, pledge or governance flags in the sample data.
Monitor: Re-check after each quarterly result.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 17.9% | stays above 15% | falls for two consecutive years |
| Cash conversion | 122% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 6.2% CAGR | tracks the 49% priced in | slows for two quarters with no margin offset |
| Promoter holding | 9.4% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 72/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.