Current Rating and Its Implications
MarketsMOJO’s 'Sell' rating for NTPC Green Energy Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This recommendation is based on a comprehensive assessment of four key parameters: quality, valuation, financial trend, and technicals. The rating was revised on 03 Nov 2025, reflecting a significant change in the company’s outlook, but the following analysis focuses on the latest data as of 28 December 2025 to provide a clear picture of the stock’s present condition.
Quality Assessment: Average Performance Amid Challenges
As of 28 December 2025, NTPC Green Energy Ltd’s quality grade is classified as average. The company’s ability to generate returns on equity remains modest, with an average Return on Equity (ROE) of 4.28%, indicating relatively low profitability per unit of shareholders’ funds. Additionally, the company faces challenges in servicing its debt, as evidenced by a high Debt to EBITDA ratio of 3.59 times. This elevated leverage level suggests increased financial risk, potentially constraining the company’s flexibility to invest in growth or weather economic downturns.
Valuation: Very Expensive Relative to Fundamentals
The valuation grade for NTPC Green Energy Ltd is currently very expensive. Despite a Return on Capital Employed (ROCE) of just 4.1%, the stock trades at an enterprise value to capital employed ratio of 3.3, signalling that the market price is high relative to the company’s capital base and earnings potential. This premium valuation is not fully supported by the company’s earnings growth or profitability metrics, which may deter value-conscious investors. Over the past year, the stock has delivered a negative return of -26.28%, even though profits have risen by 32%, highlighting a disconnect between market sentiment and underlying financial performance.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend: Flat to Negative Momentum
The financial trend for NTPC Green Energy Ltd is currently flat, reflecting subdued growth and some recent setbacks. The company’s quarterly Profit Before Tax (PBT) excluding other income stood at ₹77.20 crores, marking a 31.0% decline compared to the previous four-quarter average. Similarly, Profit After Tax (PAT) for the quarter was ₹87.59 crores, down 37.1% from the prior four-quarter average. Notably, non-operating income constitutes 36.53% of PBT, indicating that a significant portion of profits arises from sources outside core operations. This reliance on non-operating income may raise concerns about the sustainability of earnings growth.
Technical Outlook: Bearish Sentiment Prevails
Technically, NTPC Green Energy Ltd is graded bearish, with the stock showing a downward trend over multiple time frames. As of 28 December 2025, the stock’s returns reflect this negative momentum: a 1-day decline of -0.34%, a 1-month drop of -1.71%, and a 3-month fall of -6.60%. Over six months, the stock has lost 12.95%, and the year-to-date return stands at -26.94%. The one-year return is similarly negative at -26.28%. This underperformance extends beyond the short term, with the stock lagging the BSE500 index over the past three years, one year, and three months, signalling persistent weakness relative to the broader market.
Long-Term and Peer Comparison
NTPC Green Energy Ltd’s long-term performance has been below par, with consistent underperformance against benchmark indices and peers in the power sector. Despite a 32% increase in profits over the past year, the stock price has not reflected this improvement, suggesting investor scepticism or concerns about future growth prospects. The company’s midcap status places it in a competitive segment where valuation discipline and operational efficiency are critical for sustained investor interest.
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What This Rating Means for Investors
For investors, the 'Sell' rating on NTPC Green Energy Ltd serves as a cautionary signal. It suggests that the stock currently faces headwinds in valuation, profitability, and technical momentum that may limit upside potential in the near term. Investors should carefully consider the company’s high leverage, flat financial trends, and bearish technical indicators before committing capital. While the company has demonstrated profit growth, the premium valuation and weak stock performance indicate that risks may outweigh rewards at present.
Investors seeking exposure to the power sector might explore alternative opportunities with stronger fundamentals and more attractive valuations. Meanwhile, those holding NTPC Green Energy Ltd shares should monitor developments closely and consider portfolio adjustments aligned with their risk tolerance and investment horizon.
Summary
In summary, NTPC Green Energy Ltd’s current 'Sell' rating by MarketsMOJO, updated on 03 Nov 2025, reflects a comprehensive evaluation of the company’s average quality, very expensive valuation, flat financial trend, and bearish technical outlook. The latest data as of 28 December 2025 confirms ongoing challenges, including high debt levels, subdued profitability, and persistent stock underperformance. This rating advises investors to exercise caution and reassess their positions in the stock accordingly.
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