Gains for NTPC hinge on faster project execution to recover losses

NTPC reported Q3FY25 operating profit (standalone) in line with consensus but adjusted net profit was below consensus. Generation was up 2 per cent year-on-year (Y-o-Y) in Q3FY25. Under-recovery in coal-based plants stood at Rs 470 crore in 9MFY25 and is likely to decline to Rs 300 crore by FY25 end, according to management.

 

Project execution was slow. Commissioning (thermal + hydro) targets have been reduced to 2.1 gigawatts (GW) in FY25 and 2.2GW in FY26 (from earlier guidance of 2.7 GW and 4.0 GW, respectively). NTPC reported a standalone revenue of Rs 41,350 crore in Q3FY25. Operating profit was Rs 11,960 crore (up 20 per cent Y-o-Y) for Q3FY25. Adjusted standalone net profit was below estimate at Rs 4,600 crore (up 6 per cent Y-o-Y). The average tariff was Rs 4.68/unit in Q3FY25 vs Rs 4.57 in Q3FY24.

 

Gross generation was 91 billion units (BU), 2 per cent higher than 89 BU in Q3FY24. Plant availability for coal plants was 89.5 per cent (Q3FY24: 86 per cent). Coal plant load factor (PLF) was 76 per cent in Q3FY25, the same as Q3FY24. PLF for hydro improved to 22 per cent (QFY24: 21 per cent) but fell for gas to 3.4 per cent (Q3FY24: 7.7 per cent). NTPC achieved the highest-ever coal production of 30.88 million metric tonnes (MMT) in 9MFY25, a 23 per cent  growth over 27.12 MMT in 9MFY24. Cumulative expenditure on coal mine development was Rs 11,800 crore.

 

The NTPC Group generated 327 BU in 9MFY25, up 4 per cent from 315 BU in 9MFY24. The 9MFY25 standalone income was Rs 1,28,600 crore, up 6 per cent  Y-o-Y. The net profit stood at Rs 13,870 crore, up 11 per cent  Y-o-Y. On a consolidated basis the 9MFY25 total income was Rs 1,39,700 crore, up 6 per cent Y-o-Y and net profit was Rs 16,000 crore, up 8 per cent  Y-o-Y. The standalone regulated equity (as of December 31, 2024) was Rs 90,280 crore (up 7 per cent  Y-o-Y) and consolidated regulated equity was Rs 1,05,800 crore (up 5 per cent Y-o-Y). The group has secured 2,200 megawatts (MW) in tariff-based auctions in FY25.

 

The management may award 7.2GW of thermal capacity by FY27 (all under joint ventures) for brownfield expansion. The renewable energy (RE) target is 60GW by 2032 with 10.3GW under construction. The hydro capacity under construction is 2.2GW. In nuclear, the Anushakti Vidyut Megham, a JV with NPCIL, will develop nuclear projects. NTPC has transferred the 2,800 MW Mahi Banswara Atomic Power Project to JV and is planning site studies for nuclear power in 4 locations. 

 

The company commissioned India’s first Green Hydrogen Mobility Project in Leh and launched a Solar Hydrogen Microgrid Project for the Army in Ladakh. It has signed MOUs with Andhra Pradesh and Chhattisgarh and is in partnership with Kandla Port for hydrogen filling stations.

 

The BHEL-related challenges are being resolved, with the Urja I project commissioned and Patratu Unit 1 and North Karanpura Unit 3 expected by 4Q. Group capex for 9MFY25 was Rs 31,100 crore (Rs 21,600 crore in 9MFY24).

 

The group intends to commission a total capacity of 6,976 MW in FY25 (2,780 MW thermal, 250 MW hydro, and 3,946 MW RE) and 7,771 MW capacity in FY26 (1,460 MW thermal, 750 MW hydro, 5,561 MW RE) and 9,904 MW (1,460 MW thermal, 444 MW hydro, 8,000 MW RE) in FY27. Resources including land for FY25 and FY26 RE commissioning are in place. Both units of the Maitree plant in Bangladesh have been commissioned but a shut down due to coal unavailability. NTPC has invested Rs 1,324 crore as equity.

 

NTPC Green Energy (NGEL) added 550 MW commercial RE capacity in 9MFY25 and has an operational capacity of 3,475 MW. RE generation was 4,742 million units (MU) in 9MFY25 (+13 per cent Y-o-Y). The Q3FY25 total income was Rs 580 crore (up 25 per cent Y-o-Y). The Q3FY25 operating profit was Rs 500 crore (up 22 per cent Y-o-Y). For NGEL, the FY25 guidance is 3GW of commissioning, and execution slippage could lead to deratings.

 

The NTPC stock has fallen by 25 per cent in the last 3 months and analysts cut earnings estimates after 3Q results. A catalyst would be faster execution of projects.