Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NTPC Ltd (BOM:532555, Financial) reported a significant increase in profit after tax for Q2 FY25, reaching INR4,649 crore, a 19.66% rise compared to the previous year.
- The company added 485 megawatts of renewable energy capacity in H1 FY25, demonstrating its commitment to expanding its renewable energy portfolio.
- NTPC's coal production reached a record high of 19.23 million metric tonnes in H1 FY25, marking a growth of over 19.74% from the previous year.
- The company maintained a high plant load factor (PLF) for its coal stations at 76.31%, surpassing the national average of 70.63%.
- NTPC Ltd (BOM:532555) has been recognized with several prestigious awards, including the Leading CFO of the Year award and inclusion in TIME World's Best Companies 2024 list, highlighting its strong corporate governance and operational excellence.
Negative Points
- NTPC Ltd (BOM:532555) experienced a decrease in total income for Q2 FY25 on a standalone basis, attributed to a reduction in the average price of coal.
- The company faced higher planned outages, leading to increased under-recovery, with disincentives rising from INR381 crore in the previous year to INR495 crore in the current quarter.
- There are concerns about potential delays in the commissioning of new projects, particularly in the nuclear sector, with the first unit of Mahi Banswara expected to reach criticality only by FY31-32.
- The company is selective in participating in renewable energy bids, which may limit its growth opportunities in the rapidly expanding renewable sector.
- NTPC Ltd (BOM:532555) faces challenges in securing PPAs for some of its renewable projects, which could impact future revenue streams.
Q & A Highlights
Q: Why is NTPC's participation in ReBIT selective, and are there any constraints on transmission, connectivity, or land acquisition for renewable energy projects?
A: NTPC's participation is selective due to evaluating the risk and return profiles of projects. There are no major constraints on transmission or land acquisition, as NTPC is creating land banks and partnering with state governments to ensure land availability. Transmission connectivity is also not a challenge due to the scale of projects.
Q: Can you provide details on the under-recovery for H1 FY25 compared to the previous year?
A: The disincentive or under-recovery for Q2 FY25 was INR 495 crore, compared to INR 381 crore in the previous year. This increase is due to higher planned outages, which were 6.12% compared to 5.19% last year. However, NTPC expects to mitigate this by the end of the year.
Q: What is NTPC's response to the potential government decision to stop issuing new FGD tenders?
A: NTPC's Director of Projects, Mr. Sundaram, stated that the decision is pending a Supreme Court case, and NTPC will not be affected as it operates on a cost-plus basis. Any changes in FGD requirements are considered a change in law, and NTPC remains unaffected by such policy decisions.
Q: Can you explain the significant deferred revenue reported this quarter and its impact on EBITDA or PBT?
A: The deferred revenue is mainly due to unfavorable ERV expenses of INR 1,997 crore. These costs are booked under relevant accounts, and the pass-through happens below PBT due to the cost-plus mechanism. It is profit neutral for NTPC.
Q: What are the expected commissioning sizes for thermal projects this year and next year, and what is the status of future project orders?
A: For FY25, NTPC expects to commission 2.7 gigawatts of thermal capacity. For FY26, the expected commissioning is 1.46 gigawatts. NTPC plans to award 13.6 gigawatts of thermal projects by FY27, with 8.8 gigawatts already in the bidding stage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
