April , 2023
NTPC Limited
16:54 pm

Nandini Dasgupta

Company Profile

NTPC Ltd, formerly known as National Thermal Power Corporation Limited, is a central public sector enterprise in India that is owned by the Indian Ministry of Power and is involved in the production of electricity and related operations. It was established in 1975. New Delhi serves as the NTPC Ltd’s administrative centre. The primary duties of NTPC Ltd in India are production and distribution of power to State Electricity Boards. The organisation also performs consultation and turnkey project contracts that encompass engineering, project management, construction management, operation and management of power plants in India.

Power Industry in India

• Electricity is one of the most important infrastructure elements, essential for national wellbeing and economic development. For the Indian economy to grow steadily, enough electrical infrastructure must exist and be developed. 

• The Ministry of Power has been working hard over the past few years to construct a unified national grid, strengthen the distribution network and achieve universal household electrification in order to transform the nation from one with a power shortage to one with a surplus.

• One of the most diversified electricity sectors in the world is found in India. Power generation comes from a variety of sources including traditional ones like coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural and domestic waste.

• Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

• India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 408.71 GW (approximately) as of October 31, 2022.

• With electricity generation (including renewable sources) of 846.18 Billion Unit (approximately) in India between April-September 2022, the country witnessed a growth of 10.67% YoY. The peak power demand in the country stood at 210.79 GW on June 9, 2022.

• Under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.

• In the Union Budget 2022-23, the government allocated Rs.19,500 crore (approximately) for a PLI scheme to boost manufacturing of high-efficiency solar modules.

• In order to meet India’s 500 GW renewable energy target and tackle the annual issue of coal demand supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026.

• The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, 

“Saubha-gya”, was launched by the Government of India with an aim of achieving universal household electrification. As of March 2021, 2.82 crore (approximately) households have been electrified under this scheme. 

Company Perspective and Review

• NTPC is a large cap company that operates in the power sector. For the fiscal year ending March 31, 2022, NTPC’s primary product/revenue segments are generation of electricity, coal, other operating revenue, consultancy income and lease rentals.

• Financials for March 31, 2022, the firm recorded consolidated Net Sales 13, 06,355 cr and adjusted PAT of 154,156 cr (approximately).

• As per reports, there is a potential deal between Malaysia’s Petronas and NTPC’s Renewable Energy arm and offering $460mn for a 20% stake in NTPC’s Renewable Energy arm. The speculated deal would imply a price of approximately Rs.12.5 per share for NTPC shareholders after a 20% holdco discount, compared to the current market capitalisation of around Rs.10.8 per share. This would represent value accretion of approx Rs.1.7 per share.

• With rating drivers of the company like operational efficiency, capacity additions and Enterprise, Social and Governance (ESG) concerns right in place, leading the brokers / analysts indicating a good BUY. 

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