NTPC Limited analyst Q&A

Thank you very much. We will now begin the question-and-answer session. Our first question is from the line of Mohit Kumar from ICICI Securities Limited. Please go ahead.

The first question is on the thermal power plant. I think you mentioned 15.2 GW which you were looking to award in near future. Can you give us a year wise plan for this capacity which you are looking to award, fiscal year wise?

The coal capacity planned for tendering during FY25 would be around 10,400 MW. So, this would follow in different quarters Q2, Q3, Q4. This includes Sipat 3 - 800 MW, Darlipalli 2 - 800 MW, Meja 2 - 2400 MW, Nabinagar 2 - 2400 MW and Telangana 2 - 2400 MW, Gadarwara 2 - 1600 MW, so that totals to 10,400 MW during FY25. During the FY26, it would be Anpara 1600 MW, Obra 1600 MW, so totaling 3200 MW and for the FY27, it would be Patratu which would be 1600 MW. So, this adds up to 15,200 MW and this does not include 1600 MW of Singrauli 3 already awarded to BHEL during Q3 of FY24 and this would be implemented both by NTPC on a standalone and JV & subsidiary t aken together, 53% would be standalone and 47% would be through JV and subsidiary.

My second question is on the under recovery in the full fiscal on the standalone and consolidated basis and what is the outlook for the under recovery?

Yes. For the whole year it was Rs. 776 crore and for Q4 it was Rs. 36 crore. Significantly, a major part of this is coming from 2 power plants, one is Barh, and one is B arauni. Barauni, which was very vintage plant has been decommissioned, so this problem will not remain and the problem with Bar h has been significantly arrested. So, apart from th ese 2 units, the disincentive was close to Rs. 150 crore only and this has been significantly due to the requirement of high and low demand season regulation, which has now been discontinued. So, this compartmentalization of low demand and high demand season and which was pre -decided thing, whereas the actual realities were different, system demands were different while creating this, b ut through a policy advocacy, we have been able to discontinue that with persuasion and so these problems will not continue. So, we are hopeful that in the coming years, disincentive would be brought to the minimum level.

My last question is, is it possible to give the revenues, EBITDA and profit for the NTPC renewables subsidiary for FY24?

EBITDA of NGEL is Rs. 1,820 crore. The PAT for FY24 was Rs. 343 crore.

Thank you. The next question is from the line of S umit Kishore from Axis Capital. Please go ahead.

My first question is related to the renewable pipeline projects. So, in auctions which were concluded in FY24, what was the NTPC's win across wind -solar, hybrid, FDRE basically all RE auction, that is the first question?

So, that figure is more than 5 GW.

Yes.

So, why in the past quarter only about 0.2 GW of renew able was commissioned, while on the third quarter conference call you expected about 1 GW could get commissioned in the fourth quarter. Just want to understand here what are the execution impediments and now what is the RE capacity likely to be commissioned in FY25, 26 and 27?

So, there were primarily 2 reasons which led to this situation. One was the delay in the procurement of modules because we got a late clearance from the government to import the modules from the countries outside India. And the second was, there are some delays on the land acquisition front. So, both have been now largely addressed. The modules are already at our sites. We have been able to procure 1.5 GW and they have been already at site by March. So, this capacity should progressively come in the first half of this year, so the total capacity addition which we target for this year is about 3 GW, the next financial year, we will commission about 5 GW and subsequent to that 8 GW.

Could you also provide an update regarding your medium-term plans for green hydrogen, pumped storage hydro and nuclear. So, we are looking at may be the next 5 to 10 years, what is NTPC thinking about the scale of investments and what quantifiable sort of targets have been outlined in your vision plan?

We have got one PSP order from Tamil Nadu for Upper Bhavani 1000 MW. We are in the DPR stage and the construction will be gin after 2 years (pre- construction) and take around 5 years (construction). Then we are expecting more PSP orders from Chhattisgarh, Himachal Pradesh, Karnataka, Gujara t, Maharashtra and Meghalaya. We are holding to our earlier target of 10 GW in PSP. Coming to nuclear, the joint venture with NPCIL, ASHVINI has moved up. It is expected to get the cabinet clearance, may be by next month end and where it is likely that Mahi Banswara project in Rajasthan shall be allotted to this joint venture wherein 4 x700 MW capacity is there. So, this project is expected to achieve its FPC in the FY26 and expected to be commissioned by FY32.

On green hydrogen, we are running various pilot projects as on date. We have a few projects on the mobility side and one of the projects is at Leh where we are planning to run 5 buses by the time frame of July 2024 and another e- mobility project is in Delhi, where also we are planning to run 5 buses by December 24. In addition to that, we have signed an agreement with Army for establishment of a microgrid based on green hydrogen and that project is already awarded and underway. We are als o establishing a hydrogen hub at Pudimadaka and as far as the other pilot projects are concerned, we have tied up with Gujarat Pipavav for export of ammonia. So, as the offtake gets crystallized, I think the clarity will emerge on what is the quantum of this market.

One book keeping question if I may, the dividends from subsidiaries and JV, if you can mention for FY24 and how has it grown and similarly what is the profit from subsidiaries and JV in FY24 and how has it grown year-on-year?

For Subsidiaries, the profit has grown by around Rs. 2,430 crore, which was earlier Rs. 1,466 crore, current year it is Rs. 3,897 crore. The share of profit of JV has increased by Rs. 856 crore that is from Rs. 780 crore to Rs. 1,636 crore. So, as far as the dividend is concerned, the dividend from subsidiaries is Rs. 904 crore and for joint ventures, it is Rs. 726 crore which totals to Rs. 1,630 crore. Last year, it was Rs. 2,336 crore.

Why has there been a reduction?

Reduction in the sense that although there is a profit, there are some retained earnings in order to plough back in the various projects on the hydro/renewable side.

Thank you. The next question is from the line of Subhadip from Nuvama. Please go ahead. Subhadip: Just wanted to check, if you can help us with the adjusted PAT number for the fourth quarter and for full year FY24?

As you know, the reported PAT for the Q4 is Rs. 5,556 crore, the adjusted PAT is Rs. 5,107 crore, which is a 6% raise over the previous year. As far as the full financial year is concerned, as against Rs. 16,032 crore during the last year , adjusted PAT would be Rs. 16,405 crore, increased by 2%. But there is one thing I would like to share just as a perspective that while we are trying to give you the figures of adjusted PAT, always while reporting the current year, there is certain disadvantage because we are effectively discounting or deducting the previous year sales . In a regulatory mechanism , always there is deferred realization due to the regulatory process. So, it has been our experience that every year on an average around Rs. 1,600 to Rs. 1,700 crore is the revenue that is received pertaining to past year s, but the same standard the current year’s revenue, which is rightfully due with the current year , we might be getting in a year later or couple of years later, so that has been the average. So, we should keep that in mind also, because only deducting this amount will not give a complete picture. Subhadip: Sir, also just clarifying on a point that I think the regulated equity has gone up by 11% and 13% on the standalone and consolidated basis, so is there also a lead lag effect that is there because maybe some of the regulatory equity addition has happened in the middle of the year and hence you might see a higher growth coming into next year?

Absolutely, so typically, if you see the regulated equity, we start reckoning once the plant achieves a COD , b ut, however, while the denominator has increased suddenly, the full year effect of the earnings will not be there. So, the complete effect of this capitalization and the incremental regulated equity benefit will be seen in the next year. Subhadip: Lastly, with regard to the renewable portfolio, I understand that we had talked about 20 GW plus portfolio with PP A signed and around 50% of that being corporate PPA. Have those same numbers gone up over the last few months ? Are we seeing higher PPA sign number or any color on that?

More or less it is at the same . There will be some differential numbers, but broadly speaking it is the same. We have given you an account previously also that right now we have a 23 GW which is visible with 3.6 GW commissioned, 8.4 GW under execution with PPA available, construction contracts awarded and roughly 11 GW is in pipeline where we have either won the bid or LO A has been received , PPA sign ed o r the JVA sign ed, term sheet signed, or a consent is received. So, the break up if you want , I can give that L OA, PPA available is 4.08 GW. We have one LOA awaited for SECI tranche, around 0.2 GW. For JVA, term sheet signed or under advanced discussion stage it is 5.49 GW and consent received is close to 0.8 GW. So, that adds to 10.57 GW. So, under execution and in pipeline, adds up to around 22 GW , out of this, Solar constitutes around 16 GW and Wind constitutes around 6 GW.

Thank you. The next question is from the line of Dhruv Muchhal from HDFC Asset Management Company. Please go ahead.

Sir, the government is seeking gas-based plants to run and giving an allowance of about 1.2 times the gas cost. I believe we have this Ratnagiri plant which I think is not under PPA, so do we stand to gain there and are there any other gas plants that will also probably benefit out of this scheme?

Primarily, the RGPPL plant which you mentioned is under PPA. It is not out of PPA, PPA is there with predominantly Maharashtra and a small portion with Goa, Diu & Daman. So, that is point number one, but yes, as per the directives, it is being continuously being declared and depending on the schedule that we are receiving, we are generating.

So, all plants have PPA, so from a merchant basis it does not benefit us?

No, as far as RGPPL, we do have some plants in NTPC where it is at present which are 25 year plus plants where the customers have voluntarily relinquished it at some certain point of time, and these are the plants where we are selling it under various segment s of the market or as per the system requirements of the grid operator and trying to optimize the revenue there.

908 MW as far as gas is concerned and a little portion of thermal was relinquished, but it has since been reallocated. So, right now you can treat it as 908 MW.

Thank you. The next question is from the line of Girish from Morgan Stanley. Please go ahead.

I may have missed this. So, can you help us with the commissioning outlook for the coal based plants for the FY25 and FY26 and if you can help with the plant names?

The COD expected during FY25 is 2178 MW on a standalone basis and for JV subsidiary, it is 4602 MW. So, on a group basis we are expe cting 6780 MW for FY25. And this would be thermal 2780 MW, hydro would be 1000 MW and renewable 3000 MW, so that accounts for 6780 MW. For FY26, this would be 6460 MW, the break up being 1460 thermal and 5000 renew able and for FY27 we are expecting 9244 MW with the breakup of thermal 800 MW, hydro 444 MW and renewable 8000 MW. So, the next three years that aggregates to 22.5 GW.

Sir, just in terms of consolidated CAPEX, you mentioned standalone CAPEX of Rs.22,700 crore, can you arti culate for FY26 standalone and consol idated CAPEX and for FY25 consolidated CAPEX?

See going forward, we are expecting Rs. 35,000 to Rs. 50,000 crore per annum in the next 2 -3 years and just to give you an idea for FY24, the standalone CAPEX was Rs.19,319 crore. At a group level it was around Rs.35,000 crore. So, the figure I mentioned Rs. 35,000 to Rs. 50,000 per annum was on a group level.

So, this includes all types of CAPEX around coal mining as well as renewable as well as FGD as well as everything?

Entire gamut of our operations.

See, as far as surcharge is concerned for Q4, it was Rs. 118 crore and for the total year it is Rs. 303 crore as far as the surcharge is concerned that occupies a significant portion of the other income. But evidently, as we have shared with you in the past that with the more robust collection mechanism, security mechanism and surcharge is incidental, and if it goes down, it is a mark of a better collection efficiency.

Sir, j ust final one on subsidiary and joint venture profit, I know you have highlighted the delta, is it possible to just call out which are the key subsidiaries which are driving this delta and the j oint ventures as well , like which are the key joint ventures which are leading to the increase?

See, the significant upside as far as subsidiary is concerned would be BRBCL, which from Rs. 248 crore it has gone to Rs. 517 crore, RGPPL is another one where there is a significant variation and NTPC Green Energy Limited has doubled its profit and increased by Rs. 169 crore. NEEPCO again it has gone up from Rs. 396 crore to Rs. 548 crore. And these are the upside and there are marginal reduction in NVVN and THDC. All put together, it is upside by Rs. 2,430 crore as far as subsid iary is concerned. Coming to joint venture, all of our major joint ventures have done significantly well. HURL, Hindustan Urvarak & Rasayan Limited, the profit is up by Rs. 411 crore, BIFPCL, the Bangladesh plant after achieving COD of both the units, the profit is up by Rs. 309 crore. Meja, the other joint venture with the UP is up by Rs. 131 crore. Aravali Power is up by Rs. 125 crore and EESL, the differential is Rs. 83 crore.

Sir, last question on monetization of renewable, can you comment on anything around timelines expected and how the process will be based on whatever you can share at this stage?

See, as far as the monetization goes, we are going ahead with the IPO plans. This would be tentatively around October or November. That is the broad plan. So, post June, it will be, DRHP activities and other due diligence process would take shape.

And sir, can you comment on whether this will be like exact split of the current entity or NTPC will be the holding company, can you call out on the structure as to how the IPO will pan out?

No, NTPC would of course be the holding company , NGEL would remain a subsidiary of NTPC even post IPO.

So, what I meant was that will the existing shareholders exactly get the same proportion of shares in the new entity because the re are two ways of doing it, right, so just wanted to check?

It could be in the nature of a fresh issue.

Thank you. The next question is from the line of Atul Tiwari from Citi. Please go ahead.

Sir, could you just mention the standalone regulated equity again, I just missed that?

Standalone the regulated equity is Rs. 87,713 crore which has grown up by nearly Rs. 10,000 crore. It was around Rs. 77,628 crore last year.

Thank you. The next question is from the line of Nikhil Ni gania from Bernstein. Please go ahead.

My question is on the renewal listing plans . In the earlier discussion that was brought up that you want the business to be a certain size before it is listed, but given that the renewable commissioning has been slow due to the reasons mentioned earlier, land, module availability, just wanted to understand, if you could share, why the rush to list it so soon in October, November, why not wait for some time and would n't equity funding become a challenge once it is separated from the parent for the big pipeline?

No, we don't think that it would be any kind of a rush because we are going as per our plan and our conviction and there is immense value capturing which we foresee and given the visibility of almost 22 GW which I was sharing with you and the plans for going ahead and reaching a 60 GW by FY32. So, we are of the view that the market is quite conducive, and investors are upbeat as regard investment opportunity in the green area. So, we are of the view that it will be right time to go ahead with that . Coming to the support of NTPC , depending on our investment plans and expansion plans, the equity requirement would be taken care primarily through follow on public issue which in any case we are mandated to reach 25% progressively and besides that in case of need, of course the holding company will stand behind to support any kind of supplementing the equity requirement.

My second question is on the renewables, again. So, module prices are down significantly last year, the tender of tariffs were up as well. So, wanted to get a sense of the equity IRRs one can expect in upcoming renewable projects, any uptick do you see on that compared to the earlier guidance given of around 12% equity IRR for renewable projects?

The equity IRR is something , it would be a strategy which is internal to the company because predominantly we are going through the bidding route. So, however, broadly the indications which we gave yo u given the level of competition and given the level of expected IRR, so it would much remain the same. However, as I mentioned that we will have a blend of both auction route as well as forging joint ventures with other PSUs and tapping the C&I segment. So, the other advantage in the renewable side is the lower gestation period. So, that would also help to bring us an IRR which is comparable with our existing line of business in thermal where you have a bigger, although you have a regulated return close to 15.50% because of the larger gestation period. We are trying to see that our strategy matches to the expectations in line with our existing business.

My last question is on the thermal side, just wanted some clarification, the 15 GW to be ordered on the thermal side, the PPA for that, if you could just share some color, it is all in place or how much is left?

We have got PPA for Sipat 3 - 800 MW, Darlipalli 2 - 800 MW, Meja 2 - 2400 MW and Nabinagar 2 - 2400 MW where PPA is for 2x660 MW are available. We have to sign 3x800 to increase capacity. So, in short, out of 15,000 broadly 8,000 tie-up is available and 7,000 we will be taking up for higher tie up? There is ample d emand. As you know, PPA and allocation to different state s also comes under the domain of the ministry, so we are in discussion with the states as well as the Ministry to tie it up, firm it up.

Thank you. The next question is from the line of S hashi Ranjan. Please go ahead.

Can you just help us that for the CAPEX there is 70:30 debt equity that we are planning and in view of the interest that we are incurring is 6.67 %, any measures to cut down the gearing ratio for better valuation of the company or investing those money into green technologies like battery energy storage system?

Are you suggesting that are we rethinking on the debt equity in the existing business? Is that your question?

I mean trying to improve the debt equity ratio and whatever we say we can?

Let me try and answer that as far as our thermal business is concerned, it has been and it will remain a cost plus where there will be regulated equity and in order to optimize o ver there , so there is a clear stipulation , normative stipulation of 70:30. So, we would definitely be trying to invest optimally over there up to 30% and as far as the renewable business is concerned, while this will again depend in tune with the segment which we are trying to get the business, whether it is a bidding route or whether it is some kind of a hybrid cost plus through a memorandum of understanding with other entities. So, again there in order to do a higher gearing, the auction route would be the one where we would do higher gearing in order to be competitive in the bidding process, whereas it is a negotiated deal, we will try to see that the equity component is more so that you have assured return on equity.

Are we moving towards newer technologies like battery energy storage system or small modular reactor with collaboration with NPCIL?

Absolutely. We have plans on the nuclear side in terms of newer technology, be it in terms of SMR or you hav e PHWR also. So, these are at a more exploratory stage. We are planning to provide an SMR , p redominantly in integral type. And of course, most of uranium fuel , then MBR and coming to battery storage also we are working on that.

Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to Mr. Subhadip for closing comments. Subhadip: Thank you. I would like to thank the management of NTPC for giving us this opportunity to host the call. Any closing remarks from your side, Sir?

Thank you so much for that good level of participation and all these questions were very informed an d pertinent. So, it was a pleasure interacting with you and sharing our p lans and numbers with you. Thank you so much, Su bhadip and all the participants.

Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us. You may now disconnect your lines. ***********************************