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EBITDA Miss, Capacity Additions in Focus

Consensus Vs. Actual for Q2FY26: Revenue - MISS; EBITDA - MISS; PAT - BEAT

Change in Estimates post Q2FY26

FY26E/FY27E: Revenue: 0%/0%, EBITDA: 0%/0%, PAT: 0/0%

Recommendation Rationale

* Total Capacity Addition: NTPC group’s installed capacity grew by 1,247 MW QoQ to 83,893 MW in Q2FY26, led by 684 MW of Solar capacity additions, 250 MW of PSP, 220 MW of coal-based thermal capacity and 93 MW of wind capacity. The 220 MW of thermal additions is net of discontinued plants and includes 660 MW of Khurja plant commissioned in and the discontinuation of 440 MW (110 MW x 4 units) of Tanda plant in Sep’25. The company’s under-construction capacity stands at 33 GW, consisting of 17 GW of thermal, 14 GW of RE capacity and 2 GW of hydro capacity. It targets to add 9,844 MW, 9,600 MW and 10,564 MW in FY26, FY27 and FY28, respectively, aiming to reach 149 GW by 2032 and 244 GW by 2037.

* Thermal and Hydro Targets: The company targets to commission 2,780 MW, 1,600 MW and 2,120 MW of thermal capacities in FY26, FY27 and FY28, respectively. For Hydro, it plans to commission 1,000 MW in FY26 and 444 MW in FY28.

* RE Targets: The company has a target to reach 60 GW of RE capacity by FY32 and is well on track to achieve the same. It plans to add 6 GW of RE capacity in FY26, 8 GW in FY27 and another 8 GW in FY28.

* Operational Update: Gross Generation stood at 83.2 BUs, down 6%/9% YoY/QoQ. In Q2FY26, the PLFs for coal-based plants stood at 66%, 6.8% for gas-based plants, 23% for solar plants and 105% for Hydro plants. While Hydro plants saw a strong seasonal improvement (97% in Q2FY25 and 56% in Q1FY26), coal-based plants saw a decline in PLFs (72% in Q2FY25 and 75% in Q1FY26).

* Sector Outlook: Positive

Company Outlook & Guidance: To increase its capacity to 149 GW by 2032, the company has a capex plan of ~7 Lc Cr at the group level. This will drive the growth in the regulated equity. Due to its strong vendor network and management, it expects lower execution risk in setting up thermal projects.

Current Valuation: We value NTPC using SoTP with the thermal business at 2.0x P/BV on Sep’27E (from 2.1x on FY27E) consolidated regulated equity, RE business at CMP (NGEL) after accounting for the 90% stake and considering a 25% Holdco discount, PSP optionality at Rs 23/share, CWIP and cash at 1x P/BV of FY25.

Current TP: Rs 400/share (Unchanged)

Recommendation: We maintain our BUY rating on the stock.

Financial Performance:

Consolidated Net sales stood at Rs 44,786 Cr, flat YoY but down 5% QoQ, missing our estimates by 1%and consensus estimates by 3%. EBITDA stood at Rs 12,816 Cr, up 10%/2% YoY/QoQ, missing our and consensus estimates by 1%. EBITDA margin was 28.6%, up 254 bps/189 bps YoY/QoQ. PAT stood at Rs 5,255 Cr, down 3%/14% YoY/QoQ, beating consensus estimates by 2%. PAT adjusted for regulatory deferral movement stood at Rs. 3,548 Cr

Outlook:

NTPC’s robust thermal assets provide cash flow visibility. NGEL will unlock the RE business value with its aggressive RE capacity addition targets. We believe NTPC is a good portfolio bet given its stable dividend yield, and a further rerating potential cannot be ruled out if the peak deficits increase in future. The company targets to add 9,844 MW, 9,600 MW and 10,564 MW in FY26, FY27 and FY28

Valuation & Recommendation:

We maintain our BUY rating on NTPC. We value the stock using SoTP with the thermal business at 2.0x P/BV on Sep’27E consolidated regulated equity, RE business at CMP (NGEL) after accounting for the 90% stake and considering a 25% Holdco discount, PSP optionality at Rs 23/share, CWIP and cash at 1x P/BV of FY25. Our TP of Rs 400/share indicates a potential upside of 16% from the CMP.

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