NTPC, India’s massive state-owned power company, recently announced that it will pay a ₹2.25 interim dividend per share for 2023–2024. This decision, coupled with a 7.3% YoY rise in net profit for Q3, might seem like a beacon of stability amidst a choppy market. A deeper examination of the company’s Q3 numbers, however, paints a more complex picture as revenue and EBITDA below projections.
Headline Numbers: A Mixed Bag
NTPC’s Q3 net profit stood at ₹5,208.87 crore, exceeding analyst estimates by a slight margin. By comparison, this is a 7.3% increase from the same quarter the previous year. However, a 3.9% decline in revenue from operations, which settled at ₹42,820.38 crore, tempers the positive sentiment. The dip in revenue primarily stemmed from lower tariffs and the absence of one-time gains in the previous quarter.
EBITDA and Margin Woes:
Further casting a shadow over the headline numbers is the 18% YoY decline in EBITDA to ₹12,116.42 crore. This translates to a contraction in the EBITDA margin from 33% to 28%. A number of causes, including increased fuel costs and decreased plant load factors for coal-based power plants, are cited by analysts as contributing to this fall.
Dividend Decision: A Signal of Confidence?
Despite the mixed Q3 performance, NTPC’s board maintained the dividend payout at ₹2.25 per share. This decision aligns with the company’s track record of consistent dividend payouts and signals confidence in its future cash flow generation. Considering that the dividend payout at the current market price will translate into a yield of about 2.93%, NTPC is an attractive option for investors looking for income.
Market Reaction: A Cautious Optimism
The Q3 results announcement caused NTPC’s stock price to drop 1.2% at the NSE opening despite the dividend announcement receiving strong feedback. The market’s cautious response reflects worries about the sales and EBITDA declines, and investors probably want more information about the company’s growth trajectory in the future.
Green Energy: A Beacon on the Horizon?
Amidst the mixed bag of Q3 results, NTPC’s foray into the green energy space offers a ray of hope. NTPC Renewable Energy Limited (NTPC REL), the company’s subsidiary, is pursuing renewable energy projects with great vigour. With over 7 GW of installed capacity and ambitious expansion ambitions, NTPC REL. The potential unlocking of value through the green energy IPO and the company’s established presence in the conventional power sector could provide a significant growth driver in the long run.
A Tale of Two Sides
NTPC’s Q3 results paint a picture of a company navigating through a complex set of circumstances. Though the company’s short-term prospects are called into doubt by the decline in revenue and EBITDA, the dividend payment and growing net profit give reason for confidence. However, the company’s focus on renewable energy and its strong track record of dividend payouts position it well for long-term growth. Ultimately, NTPC’s future performance will depend on its ability to address the immediate challenges while capitalizing on the opportunities presented by the evolving energy landscape.
