Slow capacity addition likely to weigh on NTPC's growth prospects

Power company NTPC reported growth in the fourth quarter of the 2024-25 (Q4FY25), but slow capacity addition is worrying analysts. Standalone revenue was Rs 43,900 crore, up 3.2 per cent year-on-year (Y-o-Y). It made an operating profit of Rs 11,260 crore, down 1 per cent due to a 27 per cent increase in other expenses.

 

Standalone adjusted net profit was below estimates at Rs 5,000 crore. In FY25, NTPC Green Energy (NGEL) commissioned 1.9 gigawatt (including 50 per cent share in the Ayana acquisition of 2.1 Gw), much below its guidance of 3 Gw. The state-owned company’s power generation grew 2 per cent Y-o-Y. FY25 standalone revenue was Rs 170,000 crore, up 5 per cent Y-o-Y. Operating profit grew 5 per cent to Rs 45,400 crore and adjusted net profit increased 5 per cent to Rs 18,000 crore. 

 

Consolidated revenue for FY25 came in at Rs 1,88,100 crore (up 5 per cent Y-o-Y) while net profit stood at Rs 23,950 crore (up 12 per cent). Debt-equity ratio improved to 1.15 times (standalone) and 1.34 times on consolidated basis. 

 

Gross power generation for Q4 stood at 95 billion units, up 2 per cent from 93 BUs in Q4FY24. Coal availability for plants was at 92.5 per cent in Q4 FY25 (89.4 per cent in Q4 FY24). Coal plant load factor (PLF) was 81 per cent in Q4 FY25 (up 2 per cent Y-o-Y) and PLF for hydro plants remained flat at 13.9 per cent (13.7 per cent in Q4 FY24). PLF dipped for gas plants to 2.1 per cent (2.7per cent in Q4 FY24). Average tariff was Rs 4.7 per unit in FY25 compared to Rs 4.61 per unit in FY24.

 

NTPC Group’s operational capacity stood at 80 GW, and another 34 GW is under construction. In the renewable energy (RE) portfolio about 7GW is operational, 18GW is contracted and awarded and 9GW is in the pipeline.

 

The group’s power generation in FY25 was 439 BUs, up 4 per cent Y-o-Y. Standalone generation was at 373 BUs, up 3 per cent Y-o-Y. The group’s commercial capacity reached 79,930 megawatt, while standalone capacity was 59,413MW. The NTPC Group added 3,972 Mw capacity in FY25, including 3,312 Mw from renewables.

 

The group made a capital expenditure of Rs 44,600 crore in FY25 (standalone capex stood at Rs 22,900 crore). 

 

Regulated equity rose to Rs 90,902 crore standalone and Rs 1.08 trillion consolidated, both up 4 per cent Y-o-Y. Under recovery for FY25 was Rs 464 crore.

 

NTPC Green added 2,977 Mw RE capacity in FY25 (854 Mw organic and 2,123 Mw via the Ayana acquisition), bringing the total to 5,902 Mw.  The RE capacity addition target for FY26 is 6.5 GW. Total group capacity addition  targets are 11,806 Mw in FY26 and 9,904 Mw in FY27.

 

Captive coal production targets were 45 million metric tonnes (MMT) in FY25 (29 per cent growth Y-o-Y), 50 MMT in FY26, 56 MMT in FY27, and 60 MMT in FY28. The long-term nuclear capacity target is set at 30 GW by 2047. The group’s FY26 capacity addition target totals to 11,806 MW with standalone capacity at 2,019 MW, with thermal at 1,320 MW and renewables 699 MW (expected in Q1 FY26).

 

Joint venture (JV) and subsidiary capacity is at 9,787 MW with thermal at 2,260 MW, pumped storage projects at 1,000 MW and RE at 6,527 MW (primarily from NGEL but also including other subsidiaries). FY27 capacity addition target is 9,904MW. Group capex in FY25 was Rs 55,920 crore and in FY26 the target is Rs 97,363 crore. FY27 target is Rs 1,12,172 crore for a three-year total of Rs 2.6 trillion. While the company missed FY25 capacity addition targets, the installed capacity expansion for the next two years (FY25-27) is projected to be sluggish.

 

The slow growth is being viewed with some concern by analysts, given that power is primarily a regulated business where return on equity is critical.