NTPC board approves ₹20,832 cr for two thermal projects; here’s how stock reacts

National Thermal Power Corporation (NTPC), the country’s largest energy conglomerate, has informed exchanges that its board has given a nod to a ₹20,832 crore investment in two thermal power projects. The announcement came a day after its renewable energy arm, NTPC Green Energy, filed a draft red herring prospectus (DRHP) with capital market regulator SEBI to raise ₹10,000 crore via an initial public offering (IPO) route.

Reacting to the news, shares of NTPC opened up by 1.7% at ₹431.40 after ending 2.45% higher at ₹424 in the previous session. The energy heavyweight, however, soon lost momentum and slipped as much as 3.4% from the opening level to hit a low of ₹416.60.

At the time of reporting, NTPC shares were trading 1% lower at ₹419.75, with a market capitalisation of ₹4.06 lakh crore. The stock saw correction as investors booked profit at higher levels after it touched a 52-week high of ₹431.85 in the previous session. The share price of the country’s largest power company has nearly doubled from its 52-week low of ₹227.75 touched on October 26, 2023. The stock has delivered 77% returns in the last one year; 38% in the calendar year 2024; 36% in the past six months; and nearly 7% in a month.

In a regulatory filing last evening, NTPC said that its board approved an investment of ₹9,790.87 crore for Sipat Super Thermal Power Project. “We wish to inform that the Board of Directors of the Company, in its meeting held on 19th September 2024, has accorded investment approval for Sipat Super Thermal Power Project, Stage-III (1x800 MW)  at an appraised current estimated cost of ₹9,790.87 Crore,” it said in a BSE filing.

In a separate filing, the state-owned firm informed exchanges that its board approved another ₹11,130.98 crore for investment in Darlipali Super Thermal Power Project. “We wish to inform that the Board of Directors of the Company, in its meeting held on 19th September 2024, has accorded investment approval for Darlipali Super Thermal Power Project, Stage-II (1x800 MW) at an appraised current estimated cost of ₹11,130.98 crore,” the release noted.

The Darlipali Super Thermal Power Station is located at Darlipali village in Sundargarh district of Odisha, while Sipat Super Thermal Power Station is located at Sipat in Bilaspur district of Chhattisgarh. Both these are coal based power plants.

Earlier on September 19, NTPC said in a BSE filing that its clean energy has filed IPO document with the SEBI to list its shares on the domestic bourses. NTPC Green Energy, a wholly-owned subsidiary of NTPC, looks to raise ₹10,000 crore via IPO, which will be completely a fresh issue of equity shares.

NTPC Green Energy, a 'Maharatna' central public sector enterprise, intends to use IPO proceeds to invest in its wholly owned subsidiary, NTPC Renewable Energy, to repay its certain debts. A part of the fund will be used to meet general corporate purposes. 

As per the DRHP, the company will use 75% of the raised capital (₹7,500 crore) to clear debts availed by NTPC Renewable Energy Limited (NREL). As per the IPO document, NREL has entered into various borrowing arrangements, including borrowings in the form of terms loans and various fund based and non-fund based working capital facilities. As on July 31, 2024, the company had outstanding borrowings (fund based) of ₹16,235 crore on a consolidated basis.

NREL is the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of June 30, 2024 and power generation in Fiscal 2024, as per CRISIL report cited in the DRHP. The operational capacity was 3,071 MW of solar projects and 100 MW of wind projects with presence in more than six states. For the financial year 2023-24, NREL posted revenue from operations at ₹1,962.6 crore and profit after tax at ₹344.72 crore. The operating EBITDA for the fiscal was ₹1,746.47 crore, while the margin stood at 88.99%.

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