NTPC is the third PSU to have minimum ₹3 lakh crore market cap

In fact, utilities stocks have been on a surge propelled by sustained strong demand in the past three months. The power demand in November rose 9% year-on-year (YoY) on a higher base reported in the same month last year.

Further, industry players believe that the peak power shortages are here to stay for at least another 18–24 months, with the possibility of extending to 3–4 years.

According to global brokerage firm Jefferies, return discipline is important for capacity addition to translate to growth. The foreign brokerage believes that the current backdrop increases the probability of regulated return on equity (ROE) being stable, or 50 basis points (bps) change at most. It further believes that state-owned players like NTPC and Power Grid are better placed in a regulated business.

“On competitive bidding, given access to the lowest rates, they are in a better position to generate profitable growth,” wrote Jefferies in an investor note.

Among utility stocks, NTPC trades at a cheap valuation on a price-to-book basis. While NTPC is available at 1.8 times its FY25 book value, Power Grid commands 2.3x, whereas Tata Power trades at three times its FY25 book value.