NTPC is set to report its earnings for the third quarter of FY25 on January 25. Continued capex, and growth in power demand and generation will continue to boost earnings, say analysts.
According to the average of a Moneycontrol poll of five brokerages, NTPC is likely to see revenue rise 9 percent on-year to Rs 43,014 crore compared to Rs 39,455 crore reported in the same quarter last year. Net profit is likely to grow 9 percent from a year earlier to Rs 5016 crore. This is the first earnings report from the power major after its green energy subsidiary NTPC Green was listed separately on both the BSE and the National Stock Exchange.
The most optimistic of the estimates, by Mirae Asset Sharekhan, sees revenue increase by an annualised 14 percent to Rs 45,100 crore. Elara Capital is the most pessimistic, pegging net revenue growth at just 0.67 percent.
What factors are affecting the earnings?
There are a host of factors behind analysts' optimism about NTPC's Q3.
Higher power generation
Analysts at Elara Capital noted that around 155 MW of solar capacity was commissioned by NTPC in Q3. As a result, the power major recorded a 3.82 percent annualised increase in generation to 326 billion units (BU). The brokerage added that coal stations recorded a plant load factor (PLF) of 76.2 percent during the same period. Overall, power demand in December 2024 rose 5.9 percent from a year ago to around 130 BU, potentially fuelled by a resurgence in industrial activity, according to Nuvama analysts.
Increase in capacity
NTPC's thermal under-construction capacity has increased to 17.6GW versus 11.5 GW on a quarterly basis, according to a report by Antique Broking. The brokerage added that in the third quarter, it has given investment approval for 6.4GW of coal-fired capacity. Additionally, the company is looking to commission 20 GW of renewable energy in the next three years.
Steady cash flow
In a recent report, analysts at InCred Equity noted that NTPC’s regulated business model, with cost-plus tariffs ensuring a guaranteed return on equity (RoE) of 15.5 percent for thermal projects, offers stability in earnings. The newly implemented FY25-29 regulatory framework provides greater transparency and enhances RoE visibility.
Increase in regulated equity
Most brokerages see a healthy 9 percent on-year increase in regulated equity. Elara Capital analysts estimate a healthy quarter with revenue and profit after tax to rise 5 percent and 4 percent, respectively, on higher regulated equity. NTPC operates under a stable regulated model, ensuring an assured RoE based on CERC's operating norms. NTPC cannot exceed the fixed equity component for regulated projects. What to look out for in the quarterly show?
Analysts will continue to focus on management commentary on power generation and the power major's capacity expansion plans both in conventional and renewable energy. They will also keep eye on any management plans on emerging areas of renewable energy such as green hydrogen.
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