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Continued capacity expansion

NTPC reported a 5% YoY revenue growth to INR 413.5bn in Q3FY25, with EBITDA rising 20% YoY to INR 119.6bn, and PAT up 3% YoY to INR 47bn. Gross generation grew 2% YoY to 91.2BU, and plant load factor stood at 75.98%. NTPC has a robust project pipeline, with 17.5GW of thermal capacity under construction. It plans to add 25GW of capacity (5.7GW thermal, 1.4GW hydro, and 17.5GW renewable) in FY25-27. Contracted renewable capacity rose 63% YoY to 13.9GW, with significant additions projected in the next three years. As of December 31, 2024, NTPC's standalone commercial capacity was 59,168MW (76,598MW consolidated), with standalone regulated equity up 7% YoY to INR 903bn and consolidated regulated equity up 5% YoY to INR 1,059bn. Maintain Buy with a lower TP of INR 462.

Topline increased 5% YoY, reported PAT up 3% YoY:

NTPC reported a revenue growth of 5% YoY to INR 413.5bn in Q3FY25. EBITDA increased 20% YoY to INR 119.6bn. Depreciation rose 7% YoY but interest cost declined 21% YoY. Other income increased 14% YoY to INR 9.5bn. Tax rose 37% YoY to INR 19bn. Reported PAT increased 3% YoY to INR 47bn. Adjusted PAT increased 6% YoY to INR 46bn. Gross generation increased 2% YoY to 91.2BU in Q3FY25. Plant load factor for NTPC stood at 75.98% in Q3FY25.

Healthy project pipeline:

NTPC currently has 17.5GW of thermal capacity under construction. It has awarded 8GW of thermal projects worth INR 1tn in FY25. It intends to award additional 7.2GW of thermal capacity in FY27, which will be entirely brownfield. It expects a capacity addition of 3,088MW in FY25, 5GW in FY26 and 8GW in FY27 on the renewable side. Total contracted renewable capacity stands at 13.9GW in FY25, up by 63% YoY. NTPC has plans to add 6.9GW capacity in FY25, 7.7GW in FY26 and 9.9GW in FY27. It has a target to add 25GW in FY25-27, comprising 5.7GW thermal, 1.4GW of hydro and 17.5GW of renewable energy.

Standalone regulated equity rose 7% YoY; consolidated up 5%:

NTPC added 640MW of capacity in 9MFY25. As of 31 December 2024, the commercial capacity was 59,168MW on standalone basis and 76,598MW for the entire NTPC group. Regulated equity at standalone level was INR 903bn, up 7% YoY and regulated equity on consolidated basis was INR 1,059bn, up 5% YoY.

Maintain Buy with a lower TP of INR 462:

NTPC is a play on energy transition as well as energy security. We believe its regulated equity base will increase, led by 25GW addition of thermal capacity. An expanding RE pipeline and foray into new business verticals of green hydrogen and pumped hydro storage should drive growth. The stock is trading at 1.7x FY27E P/B, which is attractive. We maintain Buy with TP pared to INR 462 (from INR 497) on better visibility on regulated returns and traction in RE initiatives based on 3x (unchanged) P/B regulated equity FY27E, 1.0x (unchanged) in cash and investment. We pare our TP to INR 462 from INR 497 on account of lower valuation from subsidiary company, NTPC Renewable due to recent correction in the stock price.

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