NTPC on expansion mode
NTPC is expanding its generation capacity and this should help grow earnings despite the new stricter tariff regulations. At 4,443 MW, the company’ power generation capacity as on October-end 2015 was 6 per cent more than that a year ago. With the commissioning of a 500 MW unit at the Vindhyachal Super Thermal Power Station in October, NTPC has achieved close to half its targeted capacity addition for 2015-16. Of the currently under-construction capacity of 23,000 MW, the company plans to commission 5,350 MW in 2016-17 and another 8,050 MW in 2017-18. NTPC is also looking at acquiring state-owned thermal power stations. With cash reserves of Rs 14,500 crore as on March 2015, it is well placed to undertake such acquisitions. Also, while NTPC’s returns have been reduced under the new regulations that will be applicable during 2014-19, its projects continue to enjoy tariffs that enable a complete pass-through of costs plus an assured pre-tax return on equity of 15.5 per cent. The company is well-placed on the raw material front too. It has a secure fuel supply with about 90 per cent of its coal requirement being met from Coal India and the rest from imports. Increasing production by Coal India too provides comfort.