NTPC shares on a dream run

Share price crosses Rs 150 mark for the first time in five years. What is pushing the stock up?

06-Jun-2022 •Udhayaprakash

NTPC shares on a dream run

National Thermal Power Corporation, popularly known as NTPC, has been on a dream run as the stock has given 17.6 per cent returns in the last three months and 38.7 per cent returns during the last year. Despite being the country's largest power producer, it hasn't been that impressive in the context of the share price. The company has only given a return of 2.5 per cent CAGR and a dividend-adjusted return of 6.3 per cent CAGR in the last 10 years.

But lately, as we can see in the chart, the share price of NTPC has been on a roll and has breached the Rs 150 mark for the first time since 2017. The last time its share price was above Rs 155 was in 2012. So what has changed with the company and what has been pushing the stock price up?

Highest ever power generation
NTPC management in its Q4 earnings call said that the company has generated 361 billion units of power and recorded its highest-ever annual power generation in FY22. This is also 15 per cent more than what the company generated in FY21, 314 billion units. On a standalone basis, it generated 299 billion units of power, which is 10 per cent higher than its FY21 numbers of 271 billion units. The company also recorded the highest power generation in a day at 1.22 billion units during the year. Average realisation per unit increased to Rs 4.2 on the back of strong demand.

Highest ever revenue and profits
Thanks to an increase in power generation and power demand, NTPC posted the highest ever consolidated revenue and profits at Rs 1,32,669 crore and Rs 15,189 crore respectively, which is 20.2 and 3.8 per cent more than FY21 numbers. The company also posted an incremental growth in revenue and profits every quarter on both YoY and QoQ basis. Q4FY22 results exceeded market expectations as NTPC posted an increase in revenue and profit of 23 per cent and 13.8 per cent YoY respectively.

Foray into renewable energy (RE)
Another major positive that investors are cheering about is the company's efforts to increase the contribution of renewable energy. It targets an RE capacity of 60 GW by 2032. With 3,440 MW of RE projects going on under EPC mode, the Street estimates that NTPC will achieve its target soon. The company's total installed capacity also increased during the year by 5.6 per cent on a standalone basis and by 5.9 per cent on a consolidated basis. At present, NTPC has 54,597 MW on a standalone basis and 68,302 MW on a consolidated basis as of March 2022.