NTPC Ltd. announced a rise in profits in the second quarter of fiscal 2025, beating analysts' estimates.
The government-run power company reported a 13.8% rise in consolidated profits at Rs 5,380 crore in the July-September quarter, compared to Rs 4726 crore in the same period last year, according to an exchange filing on Thursday. Analysts polled by Bloomberg had estimated a Rs 5,035.43 crore net profit.
The company's revenues and Ebitda, however, fell on an annual basis in Q2 FY25, missing analyst estimates.
NTPC Q2 FY25 Results Key Highlights (Consolidated, YoY)
Revenue down 0.6% to Rs 44696 crore (Bloomberg estimate: Rs 47,007.3 crore).
Ebitda down 8% to Rs 11655 crore (Bloomberg estimate: Rs 13,237.3 crore).
Margin at 26.1% versus 28.2% (Bloomberg estimate: 28.2%).
Net profit up 13.8% to Rs 5380 crore (Bloomberg estimate: Rs 5,035.43 crore)
Why Did Margins Contract
The muted growth in revenues was on the back of lower gross generation of power and marginal uptick in average tariffs.
NTPC's Q2 gross and commercial generation saw a 2.04% and 1.57% downtick on a year on year basis, respectively. The company's gross and commercial generation from solar and hydro stations, both stood at 88.463 billion units in Q2.
The company's Ebitda fell 10% year on year, which led to a 210 basis point margin contraction. Pressure on margins was mainly on the back of a 57% jump in the company's "other expenses"
What Caused The Uptick In Profits
NTPC's rise in profits was mainly on the back of a Rs 2336 crore net movement in regulatory deferral accounts balances.
"Net movement in regulatory deferral accounts" is a term particularly used in regulated industries like utilities. It essentially represents the change in the balance of these accounts over a specific period. These accounts are used to track the difference between a regulated entity's allowed revenue and its actual revenue. The difference can arise due to rate making lags, regulatory adjustment and differed taxes.
If the balance of the regulatory deferral accounts increases, it generally indicates that the company has collected more revenue than it was allowed to earn. This can lead to higher profits.
Plant Load Factor
NTPC's plant load factor also saw a decrease across almost all segments. The company's gas and small hydroelectric plant load factor saw a 11.48 and 21.91 decrease, respectively, on an annual basis. The hydro segment was the only one that saw a 4.21 increase in its PLF.
A decrease in a power plant's Plant Load Factor (PLF) indicates that the plant is not being used to its full capacity. A low PLF can mean that the plant is experiencing operational issues or downtime.
Installed Capacity
NTPC's capacity has also seen an uptick. The NTPC Group capacity stands at 76443 MW as of Sept 2024, compared to 73824 MW a year ago. NTPC's standalone installed capacity has seen a 2.3% annual uptick to 59168 MW.
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