NTPC powers ahead with plans for expansion, renewable energy business
₹242, the NTPC Ltd stock fell out of favour with investors, just ahead of the initial public offering (IPO) of Reliance Power. What then followed seemed like a never-ending lull until recently. Over the past one year, NTPC’s shares have more than doubled to ₹370 per share on the back of talk about the unlocking of value in NTPC Green Energy, its renewable (RE) power generation subsidiary.
In the FY24 earnings conference call, NTPC’s management has indicated that the process will gather momentum in FY25. NTPC’s RE capacity is 3,500 MW currently, with plans to scale it up to 20,000 MW by FY27 (delayed by a year) and further to 60,000 MW by FY32. This means RE would account for almost 46% of the total capacity target of 130,000 MW by 2032.
Sure, the excitement over the potential listing of the subsidiary is justified. But, there is the risk of NTPC suffering from a holding company discount if the green energy subsidiary is listed separately. This is because prospective investors will directly buy into the green energy company, which is going to drive the bulk of the capacity expansion in the future.
In FY24, NTPC’s standalone pre-tax earnings fell almost 6% to ₹22,710 crore and remained flattish in the fourth quarter. The latest results are unexciting, and pulled shares down more than 1% on Monday. This is thanks to the conventional way power generation companies operate in the country, leaving little scope for any surprises when results are declared.
Read more on livemint.com
