NTPC well placed to benefit from steady power demand, expansion plans

Higher plant load factors, expanding regulated equity and an ambitious capacity addition plan leave NTPC well positioned to benefit from steady growth in power demand

NTPC reported steady numbers in Q1FY27, with standalone adjusted net profit at ₹5,130 crore, up 16 per cent year-on-year (Y-o-Y).

 

Net profit stood at ₹5,340 crore, up 12 per cent Y-o-Y, with ₹260 crore regulatory-deferral credit (₹1,920 crore in Q1FY26).

 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) rose 23 per cent Y-o-Y to ₹12,630 crore with margin rising 466 basis points (bps) to 28.8 per cent.

 

Gross generation grew 2.5 per cent Y-o-Y to 93.6 billion units (BU), the first increase in five quarters.

 

The coal thermal plant load factor (PLF) was up 155 bps to 76.7 per cent and plant availability factor (PAF) was at a five-quarter high of 94 per cent.

 

The group capacity reached 90.9 gigawatts (Gw), up 10 per cent with 1.8 Gw of additions and consolidated regulated equity compounding 9.3 per cent Y-o-Y to ₹1.217 trillion.

 

But standalone equity dipped 1.9 per cent quarter-on-quarter (Q-o-Q) due to a coal-mining hive-off.

 

The standalone regulated equity was ₹92,800 crore. The group has a ₹16.9 trillion decade-long capex plan targeting 250 Gw capacity by FY37.

 

Hot summer and weak rainfall led to record peak demand of 271 Gw. Coal PLF of 76.71 per cent, is 640 bps above the all-India average, and coal PAF rose 50 bps to 93.98 per cent.

 

Solar PLF jumped 425 bps to 31.06 per cent, while hydropower (30.92 per cent PLF) and gas (5.29 per cent PLF) both normalised down from an exceptionally high Q1FY26 base. 

 

Domestic coal consumption fell 4 per cent Y-o-Y to 59.30 million tonnes (MT) despite higher generation, with captive mines meeting 19.3 per cent of the requirements and dispatches up 13 per cent Y-o-Y with nil consumption of imported coal. The average realised tariff was ₹5.04/kWh.

 

Revenue grew 3 per cent Y-o-Y to ₹43,830 crore. Capacity charges, which earn return on equity on regulated equity, rose 5 per cent to ₹16,570 crore, while zero-margin fuel pass-through fell 4.9 per cent to ₹23,210 crore on lower coal offtake.

 

Total costs fell 3 per cent with fuel, traded power and staff cost staying flat, while other expenses dropped 22 per cent to ₹4,710 crore.

 

The coal-mine business was transferred to NTPC Mining on April 1, 2026. Interest costs fell 17 per cent to ₹2,360 crore. The consolidated Ebitda rose 29 per cent Y-o-Y to ₹16,230 crore with a margin of 32 per cent. And, consolidated net profit was up 13 per cent to ₹6,900 crore with joint venture (JV) profit share up 32 per cent.

 

Group capacity rose 10 per cent Y-o-Y to 90.9 Gw with 820 Mw thermal additions, 250 Mw pumped storage project (PSP) and 726 Mw renewable energy (RE), (NGEL added 595 Mw to reach 10.7 Gw).

 

Under-construction capacity is 35.7 Gw (15.7 Gw thermal coal, 16.4 Gw RE and 3.6 Gw hydro) within the 126.6 Gw portfolio, supporting FY27 target of 9,557 Mw, FY28 target of 10,039 Mw and FY29 target of 11,478 Mw.

 

The group capex was ₹11,590 crore, up 3 per cent Y-o-Y. NTPC guided for cumulative capex of ₹16.9 trillion over the next decade, with 43 per cent to RE and 27 per cent to thermal, taking capacity to 150 Gw by FY32 and to 250 Gw by FY37.

 

Estimated generation would rise to 943 BU by FY37. The PSP portfolio would stand at 18 Gw with battery energy storage system (BESS) at 38.9 GWh. Over 30 locations across 10 states are being studied for nuclear sites.

 

The weather contributed to a pickup in demand but the performance was impressive with PLF and PAF up.

 

Consolidated regulated equity is growing at 9 per cent per annum. The drop in financing costs is a healthy signal as is the captive coal profile. 

 

Assuming macroeconomic growth and activity are sustained, demand will also continue to grow steadily (with weather playing a part in seasonal demand fluctuations).

 

The company and group are well placed to continue leading the generation sector if it can meet its capex targets which work out to around 10 Gw per annum in the medium term.

 

For NGEL, where NTPC holds 89 per cent stake, capacity targets will also hinge on fast commissioning of requisite transmission infrastructure along with a build-up of BESS to address potential curtailment issues.

 

Like many utilities, it is a stable dividend payer with FY26 payout of ₹9.7 per share.

 

The valuations would tend to be relatively stable and predictable as well with NGEL likely to get a higher discount than the parent.

 

The NTPC stock is trading at 1.7 times book value (₹210) and a price-to-earnings of 12 times. It has seen a stock price correction of 17 per cent since April.