NTPC Downgraded to 'Hold' by MarketsMOJO, But Still Shows Strong Growth and Technical Indicators.

NTPC, one of the largest power companies in India, has recently been downgraded to a 'Hold' by MarketsMOJO on July 22, 2024. This decision was based on various factors such as the company's healthy long-term growth, positive results in the last quarter, and technical indicators showing a mildly bullish trend.
One of the main reasons for the 'Hold' rating is the company's healthy long-term growth, with a 13.27% annual growth in net sales and a 35.79% growth in operating profit. In the last quarter, NTPC also showed positive results with its operating profit to interest ratio at a high of 4.80 times, net sales at Rs 47,622.06 crore, and PBDIT at Rs 14,195.24 crore.

Technical indicators also suggest a bullish trend for NTPC, with factors like MACD, Bollinger Band, KST, and OBV all showing positive signs. Additionally, the company has a very attractive valuation with a ROCE of 8.9 and a 1.5 enterprise value to capital employed ratio. It is also currently trading at a discount compared to its historical valuations.

NTPC has also been consistently generating returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods. With a market cap of Rs 3,53,443 crore, it is the largest company in the power sector and accounts for 18.06% of the entire sector's market share. Its annual sales of Rs 178,500.88 crore also make up 36.08% of the industry.

However, one concern for NTPC is its high debt to EBITDA ratio of 6.23 times, indicating a low ability to service debt. The company has also shown a low return on capital employed, averaging at 6.72%, which signifies low profitability per unit of total capital.

Despite these concerns, NTPC remains a strong player in the power industry with consistent returns and a dominant market share. Investors should keep a close eye on the company's debt management and profitability in the future.