Goldman Sachs Review of NTPC’s Q4 Performance and Future Prospects

Goldman Sachs (NYSE) has recently analyzed NTPC's fourth-quarter performance for FY24, noting that the company's adjusted consolidated profit after tax (PAT) stood at Rs 53 billion, slightly below the estimated Rs 55 billion. This shortfall was attributed to higher-than-expected fixed cost under-recovery from operational issues at the Barh and Barauni power plants.

Renewable Energy and IPO Plans

NTPC's renewable energy portfolio has expanded significantly to 23.2 GW at various stages of development. The company plans to monetize this growth through an Initial Public Offering (IPO) by October-November 2024. Post-monetization, NTPC will continue to support the renewable segment's growth if needed, with the completion of these projects expected by FY27.

Coal and Nuclear Projects

NTPC's new coal project pipeline is robust, standing at 15.2 GW, with over 10 GW expected to be ordered in FY25. Additionally, NTPC is entering the nuclear energy sector, planning to order the 2.8 GW Mahi Banswara nuclear power plant in partnership with the Nuclear Power Corporation of India within the current fiscal year. This strategic move into nuclear energy is anticipated to ensure long-term growth stability for NTPC's core business after renewable business monetization.

Analyst Recommendations

Goldman Sachs maintains a 'Buy' rating for NTPC, despite a recent share price rally. Analysts predict further growth in the coal capacity pipeline by an additional 12 GW, enhancing the value derived from renewable business monetization. NTPC's stock is trading at a forward price-to-book value (P/BV) of 1.9x, which, while above its historical median, remains significantly lower than the 3.4-3.6x multiples of private sector peers like Tata Power (NS) and JSW Energy (NS).

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