NTPC capacity pipeline and thermal efficiency underpin long-term power earnings growth

Investment View and Valuation

Geojit Investments Limited’s August 12, 2026 company update on NTPC Limited reiterates its BUY rating and raises the target price to Rs 419 from Rs 416 previously. The broker views NTPC as particularly well positioned for India’s long-duration power-demand growth, supported by visibility on regulated capacity additions, an expanding clean-energy portfolio and funding flexibility.

The target price is based on 9.2x FY28E EV/EBITDA.

Capacity Pipeline and Long-Term Growth Visibility

NTPC Group’s installed capacity stood at 90,904 MW as of June 2026, following net additions of 1,796 MW in Q1 FY27. The additions comprised 976 MW of renewable capacity and 820 MW of thermal capacity.

NTPC had 35.7 GW under construction, including 16.4 GW of renewables, 15.7 GW of coal capacity and 3.6 GW of hydro and pumped-storage projects. Geojit considers this pipeline to provide multi-year commissioning visibility and support medium-term expansion in regulated and green capacity.

Q1 FY27 Financial Performance

Q1 FY27 consolidated revenue from operations grew 7.8 per cent year on year to Rs 50,741 crore, supported by higher generation revenue and contributions from other businesses. Generation-business revenue increased 7.1 per cent year on year to Rs 49,143 crore, while other-business revenue rose 35.3 per cent to Rs 6,619 crore.

EBITDA rose 24.7 per cent year on year to Rs 16,631 crore, with EBITDA margin expanding 450 basis points to 32.8 per cent. The report attributes the improvement to higher revenue and better cost absorption.

Reported PAT increased 12.9 per cent year on year to Rs 6,896 crore. However, higher tax expense, which rose 36.6 per cent, and a 74.1 per cent decline in net movement in regulatory deferral-account balances moderated profit growth.

Operating Performance and Funding Flexibility

Operating indicators remained favourable. NTPC’s coal plant load factor improved by 155 basis points year on year to 76.71 per cent in Q1 FY27, above the all-India average of 70.32 per cent. Captive coal supplied 19.26 per cent of NTPC’s total coal requirement, improving fuel security and reducing dependence on external domestic coal procurement.

Biomass co-firing increased from 3.7 lakh MT to 5.7 lakh MT year on year, indicating progress in cleaner thermal generation. Management is confident that NTPC can sustain strong thermal utilisation even as renewable-energy penetration rises.

The broker also cites improving receivable cycles, increasing captive-coal contribution and a low borrowing cost as supports for earnings visibility and funding flexibility.

Earnings Outlook

Geojit forecasts revenue CAGR of 8.9 per cent and EBITDA CAGR of 10.4 per cent over FY26 to FY28E. Its FY27E and FY28E estimates are as follows:

The broker reduced its FY27E and FY28E adjusted PAT estimates by 7.6 per cent and 5.6 per cent, respectively. EPS estimates were cut by 7.5 per cent for FY27E and 5.9 per cent for FY28E.

Key Risks and Monitorable Factors

The investment thesis could be affected by the following factors:

• Execution and commissioning of the large capacity pipeline
• Thermal utilisation
• Expansion of the renewable portfolio
• Coal availability
• Receivable-cycle performance
• Funding requirements associated with the planned investment programme