NTPC set to expand green energy play with latest acquisitions

Venkatesh Ganesh Mumbai | Updated on April 01, 2020 Published on April 01, 2020

NEEPCO, THDCIL seen to offer increased capacity, add to earnings

NTPC will increase its renewable energy play with its acquisition of the government’s stake in North Eastern Electric Power Corporation Ltd (NEEPCO) and THDC India Ltd (THDCIL).

Last week, the Centre raised ₹11,500 crore by divesting its 74.49 per cent stake in THDCIL, in addition to completely selling off its stake in NEEPCO.

THDCIL is a 75:25 joint venture between the Government of India and the UP government.

“Apart from adding to the equity and earnings, NTPC will benefit from a 5 per cent capacity addition. With these acquisitions, NTPC will tap the hydro opportunity and is on road for big renewables aspirations,” said Rupesh Sankhe, Vice-President, Elara Capital. The acquired assets include hydro and solar energy plants. These two acquisitions are strategic fits to NTPC, said Swarnim Maheshwari from Edelweiss Research.

NTPC is India’s largest power generation company with 53.6 GW in installed capacity. It plans to establish a 10 GW renewable portfolio by 2022. It now has 113 MW of wind power.

Gaining from THDCIL

The total installed capacity of THDCIL is 1,513 MW. It has two hydro power generating stations — Tehri HPP (4X250 MW) and Koteshwar HEP (4X100 MW) — and two operational wind power plants in Gujarat, one at Patan (25X2 MW) and another at Devbhoomi Dwarika (30X2.1 MW).

It has good financials, too. In FY19, THDCIL reported a net profit of ₹12,500 crore and an operating income of ₹28,500 crore, against ₹7,700 crore and ₹21,800 crore, respectively, in FY18.

The NEEPCO advantage

With the acquisition of NEEPCO, NTPC gets a strategic advantage with regard to supplying power in the North-East. NTPC will now address one-third of the power demand in the region.

NEEPCO has 1,457 MW of generation capacity in operation, of which 925 MW is hydro based, 527 MW is gas based, and the balance 5 MW is solar power based. It is also at an advanced stage of commissioning the 600 MW Kameng hydroelectric project in Arunachal Pradesh.

In FY19, the company reported a net profit of ₹2,100 crore and an operating income of ₹20,000 crore, against ₹2,300 crore and ₹16,300 crore, respectively, in FY18.

NTPC plans to expand its generation portfolio to 130 GW by 2032, with 30 per cent of revenues coming from non-fossil fuel-based resources. The acquisitions are expected to add 2.9 per cent to its FY21 earnings. At a combined valuation of ₹11,500 crore, the deal is 3 per cent EPS-accretive on FY21 earnings without taking into account any synergies, noted Edelweiss.

Published on April 01, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.