NTPC lowers investment valve on coal-supply uncertainty

NTPC has been indicating a cut in its investment target for quite sometime. In January, the PSU provided additional information regarding the percentage of reduction in capacity addition.

In an analyst meet held on August 1 after the PSU announced its first-quarter results, the company had signaled that it was going to shelve plans and cut investments. The increasing uncertainty in supply of coal thanks to the impasse of over allocation of coal-blocks  has forced the company to implement plans to cut back on plans for capacity addition.

At this juncture, the company has announced that it plans to add a capacity of about 1,1000 MW for the 12th Plan which is a reduction of 50% from the planned addition of 24,000 MW and that lowers the entire investment basket by about one-fourth or Rs 50,000 crore from the estimated Rs 2.25 lakh crore for the entire 12th Plan.

The stock has been under pressure and rallied quite a bit after announcement of results. It has been one of the strong performers in the Nifty basket, but there could be a little profit-booking as the fallout of this announcement.