Q3FY24 Review: NTPC: In-line results, improving outlook

31 Jan 2024 , 11:07 AM

NTPC’s Q3 FY24 standalone/ consolidated PAT was up 2%/8% over the year-ago quarter as higher surcharge income and lower tax offset the rise in fixed cost U/R (expected to normalize in Q4). It expects to award 16.8GW coal projects through FY25-27 and sees a pickup in execution of RE projects, improving outlook on LT growth. At 1.7x FY26 estimated consolidated P/B, valuations are reasonable given sectoral tailwinds and favorable stance of policymakers, believe analysts at IIFL Capital Services.

During the post-earnings call hosted by IIFL, NTPC stated

• It sees peak demand at 277GW/366 GW and base demand at 1,908BU/2,474BU by FY27/FY32 respectively
• NTPC plans to award 16.8GW coal projects (in addition to 10GW U/C) over the next three years; its thermal pipeline stands at 26.8GW (versus MoPs target of 80GW)
• NTPC seeks to commercialize 3.6GW/4GW/ 2.4GW conventional capacity in FY24/25/26
• NTPC is investing in FGD equipment and sees SOx/NOx norms compliance for its entire fleet in the next three years
• RE execution should pick up with the fall in module prices (expect 3GW RE cap adds in FY25); however, timely completion of transmission infra holds key. 
• It has a RE pipeline of 16GW (7.8GW U/C + 8.2GW under implementation) and a land bank equivalent to 3.35GW capacity increasing visibility on LT growth. 
• Capex through FY24-26 is pegged at ₹230-280 Billion p.a.

Analysts at IIFL Capital Services have maintained their FY24-26 standalone/ consolidated PAT growth estimates of 4%/10% p.a. respectively. NTPC is remains their preferred pick in the sector.