Steady Show
About the stock: NTPC is India’s largest power generation company with a total installed capacity of ~76,598 MW at the group level as of Q3FY25.
NTPC has 17% of total installed capacity in India with 24% generation share
• The company’s vision is to become a 130 GW+ company by 2032 of which 60 GW would be contributed by renewable energy.
Q3FY25 performance: On the operational front, the company registered a growth of 2% & 1.4% YoY in gross energy generation & sold respectively. The 9M PLF for the coal plants was 76.20% in FY25 vs 76.40% in FY24. The all India coal PLF was 69.47% for 9MFY25. The standalone/consol installed capacity stood at 59,168/ 76,598 MW respectively. Standalone/consol revenue came in at ₹41,352/ ₹45,053 crore up 4.8%/5.2% YoY as a result of increase in energy sold & increase in average tariff by 2.41% to ₹4.68 per KWh. Standalone/Consol EBIDTA increased by 20.3% YoY on account of decline in other expenses. Similarly, interest costs also declined by more than 15% YoY. Standalone/Consol PAT came in at ₹4,711.42/ ₹5,169.7 crore up 3% YoY. The company has declared a second interim dividend of ₹2.5 per share. The company has guided total capacity addition of 6,976/ 7,771/ 9,904 MW in FY25E/FY26E/FY27E.
Investment Rationale
• Thermal Capacity addition on track: On the conventional side, the company has 17.56 GW of thermal based plants under construction. The company is likely to order out 7.2 GW of thermal plants for FY26-27. Thermal capacity addition for FY25E/FY26E/FY27E is expected to be 2GW/1.5GW/1.5GW. We believe this will lead to 9-10% generation growth supported by strong PLF’s (averaging above national level PLF’s) on thermal business and will help standalone regulated equity growth at a CAGR of 9% from ₹90,289 crore in 9MFY25 to over ₹100,000 crore by FY26E.
• Aiming to reach ~20 GW on the renewable side: The company plans to reach 20 GW of renewable capacity by FY27E. Currently, the company has ~4475 MW of installed renewable capacity and has plans to add 3088/5000/8000 MW of RE capacity in FY25E/FY26E/FY27E respectively. It has also signed a supplementary JV agreement with NPCIL for transfer of 2800 MW nuclear power project. It is undertaking site studies to develop new nuclear-powered projects.
Rating and Target Price
• We believe strong capacity addition trajectory will drive good financial performance for the company in the medium to long run. We maintain our BUY rating on NTPC target pegged at ₹445 per share (based on SOTP Valuations).
