IGI Logo

Healthy 1H, 10% capacity CAGR over FY26-29E

NTPC’s standalone adjusted PAT increased 18% YoY to INR 53bn, ~7% above estimates, while consolidated PAT grew 26% YoY. The standalone beat was driven by lower disincentives (INR 3bn), improved PAF of 94% (+1,000bps YoY), higher generationlinked incentives and a favourable generation mix. Overall generation grew 11% YoY to 92 BU. NTPC Green revised its FY27E capacity addition guidance to 6.5GW from 8GW, still above street expectations of 5–5.5GW. NTPC Group commissioned 2.4GW in 1HFY27 and targets 8GW for FY27E. Group capacity additions are targeted at 8GW/9.6GW/10.9GW in FY27E/FY28E/FY29E, implying 10% CAGR over FY26–29E, largely driven by NTPC Green. To mitigate curtailment (impacting 20%+ of NGEL EBITDA in 1HFY27), the group plans ~47GWh of BESS capacity (5GWh at thermal sites and 42GWh through NGEL), with 1.3GWh under execution. Under-construction capacity increased to 37GW (vs. 35.7GW QoQ). NTPC also plans 4.8GW of coal equipment awards from Q1FY28, with feasibility studies underway for another 3–4GW. The stock trades at 1.5x/1.2x 1HFY29E standalone/consolidated BV, with standalone EPS CAGR of 9% over FY26–29E. We revise FY27/28E EPS estimates upwards by 2%/3% on higher incentives and maintain BUY with a SoTP-based 1HFY29E TP of INR 421/share, offering ~3% dividend yield support (FY27E DPS: INR 10).

Good Quarter:

NTPC reported Q2FY27 standalone revenue including regulatory income of INR 475 bn up 17% YoY was above our and consensus estimates by ~10%. driven by higher electricity demand and improved generation. EBITDA came in at INR 126 bn up 10% YoY and 5% above our and consensus estimates, with this Adj. PAT was higher at INR 53.4 bn up 18% YoY and 8% above our and consensus estimates, PAT PAT growth was supported by operational efficiencies and lower fixed-cost disincentives, which declined to INR 3 bn from INR 6 bn YoY. In Q2FY27 gross generation stood at 92.4 BU’s vs. 83.2 BU’s YoY, Coal PLF stood at 73.5% vs. 66.0 % YoY, Domestic fuel consumption for the quarter stood at 45.4 MMT vs 53.1 MMT YoY. Company has declared its first interim dividend of INR 3/share.

Accelerating Capacity Expansion with Renewable-Led Growth and Thermal Additions:

NTPC is targeting capacity additions of ~8.0GW, ~9.6GW and ~10.9GW in FY27E, FY28E and FY29E, respectively, driving installed capacity to ~118GW by FY29E from 89GW in FY26. FY27E: Additions are expected to be led by NTPC Green at 6.5GW, followed by Subsidiaries/JVs at 1.3GW and standalone NTPC at 0.2GW. Management indicated that physical construction could reach ~6.5GW, although ~1.5GW may face commissioning delays due to transmission constraints. FY28E: Capacity additions are expected to accelerate to 9.6GW, comprising 7.7GW renewables, 1.46GW thermal and 0.44GW hydro, with JVs and subsidiaries contributing the majority. FY29E: Additions are projected at ~10.9GW, including 7.2GW renewables and 3.7GW thermal, with standalone contribution increasing to ~2.3GW, primarily driven by thermal commissioning, while NTPC Green continues to drive renewable expansion.

Addressing Transmission Constraints and Renewable Curtailment:

NTPC Green is actively pursuing multiple measures to address transmission bottlenecks and minimise renewable energy curtailment. Management highlighted that around 180GW of transmission capacity is under construction across the Gujarat-Rajasthan corridor, alongside the Green Energy Corridor Phase III, which will strengthen evacuation infrastructure. The connectivity constraints impacting NTPC Green are expected to ease progressively, with the Khavda region's full connectivity now expected by November 2027 versus October 2026 earlier. In the interim, NTPC is leveraging temporary GNA connectivity and alternative market sales to optimise generation. Management also clarified that curtailed generation does not result in a complete revenue loss, as the PPA tenure gets extended and commences once connectivity is available, although interest and depreciation costs remain uncovered during the delay

Next phase of growth – Diversification across Nuclear, Storage and Hydro:

NTPC is expanding beyond conventional thermal generation, with nuclear energy, battery storage and pumped hydro emerging as key growth drivers. The company is progressing with its nuclear programme, including the Mahi Banswara (4x 700 MW) project, while strengthening its technical capabilities and exploring additional project opportunities. On storage, NTPC is targeting ~47GWh of BESS capacity, alongside developing pumped hydro projects, with DPRs for initial projects expected over the coming months. The company is also pursuing large-scale solar and renewable opportunities, including C&I solutions and hybrid power offerings, to leverage its generation and distribution capabilities. These initiatives position NTPC to capitalise on rising electricity demand, renewable integration and the growing need for firm, dispatchable power.

Please refer disclaimer at Report
SEBI Registration number is INH000000933