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NTPC reported 7% YoY growth in adjusted PAT to ~Rs49bn in Q4FY23. Growth was in line with generation growth of 7.6% YoY for the quarter. For FY23, generation growth stood at ~11%. On a consolidated basis, NTPC has commercialized ~4GW (72GW company now) of power capacity, including 1.3GW of renewable. Coal PAF/PLF for the year stood at 92.6%/75.9% from 88.8%/70.9%. Production from captive mines stood at 20.23MMT – up 49% YoY. The company reported an all-round performance in FY23. NTPC has ~10GW of thermal and ~17GW of RE projects under construction, which are expected to be commercialized over the next 3-4 years. We maintain our BUY rating on the stock with a Mar-24 TP of Rs205.

Good all-round performance:

FY23 was a year of all-round performance for NTPC. The company witnessed – 1) Generation growth of 11% YoY in FY23 at the standalone level, with coal PLF of ~76% – last seen in FY19. Coal PAF at 92.6% was the best in several years. 2) Captive coal production of ~20MMT grew by 48% YoY. 3) Capacity addition of ~4GW, taking total capacity to 72GW. 4) 27 GW of projects under construction. 5) RE portfolio at ~20GW comprising 3.3GW of operation, 4.6GW under construction and 12.6GW of projects with tenders won. 6) NTPC is expected to tender the majority of ~6GW of thermal power projects in the current year. NTPC is likely to monetize its RE assets through IPO or strategic sale. We believe NTPC, with its large coal assets, is among the only few players that can ramp up production (present PLF of 76%, while it has also reported 90-92% PLF in earlier years) to meet this demand. NTPC in working on several storage related projects present. It has also signed non-binding MoU for Hydrogen project. We believe, NTPC which is has the largest coal power fleet in the country is poised to be among the top players even on the Renewable side.

Valuation and Outlook:

NTPC is expected to report a 7% EPS CAGR during FY23-FY25E with RoE of ~12.5%. The company is expected to commission ~27GW of power projects over the next 3-4 years. Hence, the above growth profile will continue in the medium term. We maintain our BUY rating on the stock with a Mar-24 TP of Rs205. Improvement in coal PLF, capacity addition and RE monetization are positive parameters for the company. Key risks include any changes to the existing regulations and delay in project completion.

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