NTPC Green Energy Ltd is Rated Sell

Rating Overview and Context

On 03 November 2025, MarketsMOJO revised the rating for NTPC Green Energy Ltd from 'Hold' to 'Sell', reflecting a significant change in the company’s overall assessment. The Mojo Score, a composite indicator of various performance parameters, dropped sharply by 21 points from 51 to 30, signalling a more cautious stance on the stock. This rating encapsulates a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical outlook.

Here’s How the Stock Looks Today

As of 23 February 2026, NTPC Green Energy Ltd continues to face challenges that justify its current 'Sell' rating. The stock’s recent price movements show a modest decline of 0.19% on the day, with a one-year return of -14.69%, indicating underperformance relative to broader market indices such as the BSE500. The year-to-date return stands at -4.77%, while the six-month and three-month returns are -12.87% and -7.27% respectively, underscoring persistent downward pressure on the share price.

Quality Assessment

The company’s quality grade is assessed as average, reflecting mixed operational and financial health indicators. A key concern is the company’s high Debt to EBITDA ratio of 10.18 times, signalling a low ability to service its debt obligations efficiently. This elevated leverage ratio increases financial risk and limits flexibility for future investments or expansions. Furthermore, the average Return on Equity (ROE) is a modest 3.24%, indicating limited profitability generated from shareholders’ funds. These factors collectively suggest that NTPC Green Energy Ltd’s operational efficiency and profitability remain subdued.

Valuation Perspective

Valuation metrics paint a challenging picture for investors. The stock is classified as very expensive, with an Enterprise Value to Capital Employed ratio of 2.4, which is high relative to industry norms. Despite this premium valuation, the company’s Return on Capital Employed (ROCE) is only 3.1%, indicating that the capital invested is generating limited returns. This disparity between valuation and returns suggests that the stock may be overvalued, reducing its attractiveness for value-conscious investors.

Financial Trend Analysis

The financial trend for NTPC Green Energy Ltd is currently flat, with recent quarterly results showing significant weakness. The Profit After Tax (PAT) for the December 2025 quarter stood at ₹17.48 crores, representing a steep decline of 88.5% compared to the previous four-quarter average. Interest expenses have reached a peak of ₹230.06 crores, further pressuring profitability. Additionally, Profit Before Tax excluding Other Income (PBT less OI) dropped to a low of ₹5.74 crores. Despite a 32% rise in profits over the past year, these quarterly results highlight volatility and operational challenges that weigh on the company’s financial health.

Technical Outlook

The technical grade for the stock is bearish, reflecting negative momentum and weak price trends. The stock has underperformed the BSE500 index over multiple time frames, including the last three years, one year, and three months. This sustained underperformance suggests that market sentiment remains cautious, and technical indicators do not currently support a positive outlook for the stock’s near-term price appreciation.

What the 'Sell' Rating Means for Investors

For investors, the 'Sell' rating on NTPC Green Energy Ltd indicates a recommendation to reduce or exit holdings in the stock. This rating reflects concerns about the company’s ability to generate sustainable returns, its stretched valuation, and the bearish technical signals. Investors should be cautious given the company’s high debt levels, subdued profitability, and recent weak quarterly performance. The rating suggests that the stock may face further downside risks and that capital preservation should be prioritised over accumulation at this stage.

Sector and Market Context

Operating within the power sector, NTPC Green Energy Ltd is classified as a midcap company. The sector itself is undergoing significant transformation with increasing emphasis on renewable energy and sustainability. While the company’s focus on green energy aligns with broader market trends, its current financial and operational challenges limit its ability to capitalise fully on these opportunities. Investors may find more compelling prospects within the sector that demonstrate stronger fundamentals and growth trajectories.

Summary of Key Metrics as of 23 February 2026

To summarise, the stock’s key metrics as of today include:

• Mojo Score: 30.0 (Sell grade)
• Debt to EBITDA ratio: 10.18 times (high leverage)
• Return on Equity (average): 3.24%
• Return on Capital Employed: 3.1%
• Enterprise Value to Capital Employed: 2.4 (very expensive)
• Profit After Tax (Dec 2025 quarter): ₹17.48 crores, down 88.5%
• Interest expense (Dec 2025 quarter): ₹230.06 crores (highest recorded)
• Profit Before Tax less Other Income (Dec 2025 quarter): ₹5.74 crores (lowest recorded)
• Stock returns: 1 year -14.69%, 6 months -12.87%, 3 months -7.27%

These figures collectively underpin the cautious stance reflected in the current 'Sell' rating.

Investor Takeaway

Investors should carefully weigh the risks associated with NTPC Green Energy Ltd’s current financial profile and market performance. The combination of high debt, weak profitability, expensive valuation, and bearish technical signals suggests limited upside potential in the near term. Those holding the stock may consider reducing exposure, while prospective investors might await signs of operational improvement and valuation correction before initiating positions.

Looking Ahead

Going forward, the company’s ability to manage its debt burden, improve profitability, and demonstrate consistent financial growth will be critical to altering its investment appeal. Market participants should monitor quarterly results and sector developments closely to reassess the stock’s outlook in the context of evolving market conditions.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today