NTPC Ltd. Upgraded to Hold as Technicals Improve Amid Mixed Financials

Quality Assessment: Stable but Modest Profitability

NTPC’s quality parameters remain steady, though not without challenges. The company’s Return on Capital Employed (ROCE) stands at 8.1% for the half-year ended December 2025, slightly below the sector average but consistent with its historical performance. Over the past five years, the average ROCE has been 8.24%, indicating modest profitability per unit of capital employed. Operating profit growth has been subdued, with a compound annual growth rate of 9.17% over the last five years, signalling limited expansion in core earnings.

Additionally, NTPC’s ability to service debt remains a concern, with a high Debt to EBITDA ratio of 4.81 times. This elevated leverage constrains financial flexibility and increases risk, especially in a capital-intensive sector like power generation. Despite these factors, the company’s dominant market position and scale provide a degree of resilience.

Valuation: Attractive Discount and Market Leadership

Valuation metrics have played a pivotal role in the upgrade. NTPC currently trades at a discount relative to its peers’ historical averages, supported by an Enterprise Value to Capital Employed ratio of 1.4, which is considered attractive for a large-cap utility. The stock’s Price/Earnings to Growth (PEG) ratio of 1.5 further suggests reasonable valuation given its earnings growth trajectory.

With a market capitalisation of ₹3,51,940 crores, NTPC commands a 20.82% share of the power sector by market cap, underscoring its leadership. Its annual sales of ₹1,87,530.56 crores represent 34.44% of the industry’s total, reinforcing its dominant revenue base. These factors contribute to a valuation framework that favours a Hold rating, reflecting a balance between risk and reward.

Financial Trend: Flat Recent Performance Amid Long-Term Strength

NTPC’s financial results for Q3 FY25-26 were largely flat, with no significant growth in revenues or profits. However, the company has demonstrated solid long-term returns, generating 18.24% over the past year and an impressive 116.23% over three years, comfortably outperforming the Sensex’s 8.52% and 36.73% returns respectively during the same periods.

Profit growth over the last year was 10%, aligning with the company’s PEG ratio and indicating moderate earnings momentum. Institutional investors hold a significant 45.56% stake in NTPC, reflecting confidence from sophisticated market participants who typically conduct rigorous fundamental analysis.

Despite the flat quarterly results, NTPC’s consistent market-beating performance over multiple time horizons supports a stable outlook, justifying the Hold rating rather than a downgrade.

Technicals: Bullish Momentum Spurs Upgrade

The most decisive factor behind the rating upgrade is the marked improvement in technical indicators. The technical trend has shifted from sideways to bullish, signalling positive momentum in the stock price. Key technical signals include:

• MACD on the weekly chart is bullish, although the monthly MACD remains mildly bearish, suggesting short-term strength with some caution over longer horizons.
• Bollinger Bands indicate mild bullishness weekly and outright bullishness monthly, reflecting increasing price volatility with an upward bias.
• Moving averages on the daily chart are bullish, reinforcing the positive near-term trend.
• KST (Know Sure Thing) oscillator is bullish weekly but mildly bearish monthly, echoing the mixed but improving momentum.
• Dow Theory signals are mildly bullish on both weekly and monthly timeframes, supporting a constructive technical outlook.
• On-Balance Volume (OBV) is mildly bullish weekly and monthly, indicating accumulation by investors.

These technical improvements have been instrumental in shifting the MarketsMOJO Mojo Grade from Sell to Hold, with the current Mojo Score at 65.0. The technical upgrade reflects growing investor interest and potential for price appreciation, despite recent volatility.

Stock Price and Market Context

NTPC’s stock price closed at ₹362.95 on 16 February 2026, down 1.40% from the previous close of ₹368.10. The 52-week high stands at ₹372.00, while the low is ₹292.70, indicating a relatively narrow trading range and limited downside from current levels. Intraday price action ranged between ₹362.45 and ₹368.00, showing some consolidation.

Comparatively, NTPC has outperformed the Sensex in most timeframes, including a 7.43% gain over the past month versus a 1.20% decline in the Sensex, and a 10.17% year-to-date return compared to the Sensex’s 3.04% loss. Over five and ten years, NTPC’s returns of 278.47% and 251.10% respectively have significantly outpaced the Sensex’s 60.30% and 259.46%, underscoring its long-term resilience.

Conclusion: Balanced Outlook with Technical Upside

NTPC Ltd.’s upgrade from Sell to Hold reflects a balanced assessment of its current fundamentals and technical outlook. While the company faces challenges such as flat recent financial performance, modest profitability, and high leverage, its valuation remains attractive relative to peers, and its dominant market position provides a solid foundation.

The technical indicators have notably improved, signalling potential for price appreciation in the near term. Combined with strong institutional backing and consistent long-term returns, these factors justify a more positive stance.

Investors should monitor NTPC’s debt servicing capacity and profit growth trends closely, as these will be critical to sustaining momentum. For now, the Hold rating suggests cautious optimism, recognising both the risks and opportunities inherent in this large-cap power sector leader.

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