NTPC is reportedly planning a large coal-to-synthetic natural gas facility with a capacity of 5-10m tonnes per year. Producing SNG from its own coal would lower dependence on imported LNG, which is prone to price and supply volatility.
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Motilal Oswal Report
In the Q2 FY26 NTPC Ltd. management commentary, it highlighted its vision to take the group capacity to 244GW by 2037. Medium-term capacity addition targets were guided at 9.8/9.6/10.5 GW in FY26/27/28.
We maintain our cautious view due to execution challenges, especially at NTPC Green Energy Ltd. Further, we believe valuations for NGEL (15% of our SoTP) have little room for rerating and may continue to face pressure.
Our SoTP-based target price of Rs 370 for NTPC is premised on: Value of Rs 201 for the standalone, coal, and other businesses at Dec'27E P/B of 2x.
Value of Rs 18 for other subsidiaries and Rs 45 for JV/associate, both at Dec'27E P/B of 2x.
The stake in NGEL is valued at a 25% discount to the current market price.
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