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NTPC Ltd (NTPC) reported net sales of INR 431bn (flat YoY, -3% QoQ), 3% below JMFe on account of 3% dip in generation. EBITDA for the quarter improved to INR 128.5bn (+19% YoY,+8% QoQ), in line with JMFe on account moderation in fuel cost and other expenses during the quarter. Imported coal accounted for 4% of the total coal requirement in 1QFY24 as compared to 8% in 1QFY23. Adj. PAT came in at INR 49bn (+23% YoY, 2% above JMFe). Current installed RE capacity stands at 3.2GW with additional visibility of 16.7GW. With this, the journey of NTPC continues with transition to a balanced portfolio (45% renewables, 47% Thermal, 8% others) by FY32.

JM view: We find NTPC best placed for success in India’s energy transition, similar to its successful global peers (Green & Grey: Together We Win), and it is poised for leadership in India’s renewables market (target 60GW+ renewables by FY32) given i) visible pipeline of 16.7GW RE projects, ii) competitive advantage on debt cost at around 6% (vs. 8% for other industry players) and iii) diversity in initiatives across RE value chain like Hydrogen. Given better visibility of its thermal and renewable capacity addition pipeline and aggressive focus on transitioning to a green portfolio we have revised our estimates upwards for FY24/25. We value the company’s thermal business at 1.6x FY25E Regulated Equity and assign 10x multiple to FY25E EBITDA of its RE business. We maintain our BUY rating with a revised TP of INR 240 (INR 205 earlier)

* Transitioning to Green: NTPC has an installed RE capacity of 3.3GW with another 5.9GW under construction. Further, additional 10.8GW RE projects are under pipeline, which include a mix of ground mounted solar, floating solar, wind and some small hydro. NTPC is implementing and planning 36GW RE capacity in different states through UMREPP scheme. It also has the largest floating solar portfolio of 262MW in India.

* Thermal capacity addition: NTPC has an installed thermal capacity of 59GW as on 30 th Jun’23. The company commissioned a unit of 660MW Maitree Super Thermal Plant at Bangladesh during the quarter. Barh Unit-II to achieve CoD on 1st Aug’23. Another 9.3GW of thermal capacity is under construction. NTPC targets to commission thermal capacity of 3.6GW in FY24 and 1.9GW in FY25. The company has guided for 7.2GW of thermal capacity ordering by next fiscal.

* Foray into new areas: The first green hydrogen blending with Piped Natural Gas (PNG) project commissioned in Gujarat. First Green Hydrogen Mobility project is under implementation at Leh and another at Delhi. NTPC has entered into MOU with Indian Army for setting up Green Hydrogen Projects in its establishments. NTPC is also exploring various other initiatives involving Bio-Mass Co-firing, Waste to Charcoal, Desalination of Sea Water, Carbon Capture & Utilization (CCU), Green Chemicals such as Green Ammonia and Green Methanol. NTPC is working on a Green Hydrogen Hub near Vishakapatnam which involves a manufacturing facility for Hydrogen related equipment and production & export of Green Hydrogen. It has entered into MOU with government.

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