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In 3QFY24, NTPC Ltd (NTPC) reported net sales of INR 428bn (-4% YoY,-8% JMFe, -8% consensus), EBITDA of INR 114bn (-22%YoY, -12% JMFe), and adj. PAT of INR 52bn (+9% YoY, +4% JMFe, -2% consensus) during 3QFY24. There was a significant improvement in operations; gross generation/ plant load factor (PLF) increased to 89.5 BU (13.8% YoY)/ 76% (v/s 69% 3QFY23) which was overshadowed by the change in accounting method that has led to inflated sales during 3QFY23 (one-time adjustment of INR 30.97bn due to 'Net movement in regulatory deferral account balances (net of taxes) relating to reimbursement of ash transportation cost). Given the continued growth momentum in renewables and renewed thrust on margin-accretive thermal power, we revise our FY27 and beyond estimates upwards factoring the extended visibility of thermal power. We value the company’s thermal business at 2x FY26E Regulated Equity and assign 12x multiple to FY26E EBITDA of its RE business. We maintain our BUY rating with a revised TP of INR 368.

New thermal capacity addition: The management has guided for 16.8 GW (9.6 GW standalone, 7.2 GW JV/subsidiary) of new thermal projects to be awarded in the short to medium term. These include 2x800 MW NTPC Singrauli-III; 1x800 MW NTPC Sipta-III; 1x800 MW NTPC Darlipali-II; 3x800 MW NTPC Meja-II; 3x660 MW NTPC Nabinagar TPS; 2x800 MW UPRVUNL, Obra-D TPS; 2x800 MW UPRVUNL, Anpara-D TPS; 3x800 MW NTPC Telangana Ph-II; 2x800MW Patratu St-II; 2x800MW Gadarwara St-II. The company has targeted to order 5.6/6.4/4.8 GW of thermal projects during 1HFY25/ 2QFY26/ 3QFY27.

Renewables’ trajectory: NTPC has an installed RE capacity of 3.3GW with another 7.8GW under construction and 11.9GW under pipeline, which include a mix of ground-mounted solar, floating solar, wind and some small hydro. NTPC has a vision of 60GW of installed RE capacity by FY32.

Capacity addition: The company expects commissioning of 3580MW of projects in FY24. Around 4GW/7GW of projects are likely to commission during FY25/FY26.

Coal production: NTPC recorded 19.92MT of coal production during 9MFY24 (+45% YoY) from four captive mines i.e. Pakri-Barwadih, Dulanga, Talaipalli, and Chatti-Bariatu. It produced 23.2MT of coal during FY23 and has set an ambitious production target of 34 MT for FY24.

Flue Gas Desulphurization (FGD): NTPC has awarded 65,200MW of FGD projects out of which 12,660 MW have been commissioned and 52,540 MW are under construction which are likely to commission in the next 3 years.

Capex: The Company expects to incur a capex of INR 283.73bn during FY24 out of which INR 215.52bn is already incurred.

Regulated equity: The regulated equity stands at INR 987bn/821bn on a group/ standalone basis.

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SEBI Registration Number is INM000010361