NTPC Ltd
NSE:NTPC
Earnings Call Analysis
Q2-2024 Analysis
NTPC Ltd
The company is navigating a sustainable future with substantial goals in renewable energy. Currently holding a commission capacity of 3.3 gigawatts based on awarded projects, the company sets its sights on a broader horizon. By the financial year 2026, they aim to amplify this figure to 15 gigawatts, suggesting a significant increase in their renewable output. Looking even further, a long-term vision is established, targeting an ambitious 60 gigawatts by the end of the financial year 2032.
In the second quarter, financial performance was impacted by notable under recoveries due to overhauls. These maintenance activities, timed with specific seasons, resulted in higher than usual under recoveries. However, there is an optimistic outlook for the end of the year, where recoveries are expected to normalize within the range of 200 to 400 equities derived from specific projects. Concurrently, the company sees opportunities in the new grid code, allowing for potential power exchange sales, despite ongoing regulatory discussions.
From a financial standpoint, the company reported an adjusted PAT of INR 3,497 crores for Q2 on a stand-alone basis, a slight decrease from Q1's INR 3,794 crores. Despite this dip, the company experienced an almost 20% higher consolidated PAT compared to stand-alone in the past two quarters due to profits from subsidiaries and joint ventures. A noteworthy contribution also came from a project that started operations in late December 2022, bolstering financial outcomes.
CapEx is a critical measure of future growth potential for investors. The company reports that they are on track with their CapEx for the first half of the year at approximately 47%, amounting to INR 13,204 crores. They have set an ambitious target of INR 28,373 crores, indicative of the company's commitment to expanding its operations and further investing in its growth trajectory.
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Ladies and gentlemen, good day, and welcome to the NTPC Limited Q2 FY '24 Earnings Conference Call, hosted by B&K Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rajesh Majumdar from B&K Securities. Thank you, and over to you, sir.
Thank you, and good evening, everyone. We are presenting today the Q2 FY '24 conference of NTPC Limited. The company is represented by Shri Jaikumar Srinivasan, Director: Finance; Shri Dilip Kumar Patel, Director: Human Resources; Shri Ramesh Babu V., Director: Operations; Shri Ujjwal Kanti Bhattacharya, Director: projects; and Shri Shivam Srivastava, Director: Fuel. Congratulations, sir, on a good set of numbers. So without much ado, let us start with the opening comments from the management. Over to you, sir. .
Thank you. A very good evening to all the participants. On behalf of NTPC, I Jaikumar Srinivasan, Director of Finance, welcome all of you to the Q2 FY '24 con call of NTPC Limited.
I repeat, I have with me Shri Dilip Kumar Patel, Director, Human Resources; Shri Ramesh Babu, Director, Operations; Shri Ujjwal Kanti Bhattacharya, Director, Projects; and Shri Shivam Srivastava, Director: Fuel. I also have with me key members of NTPC.
Today, the company has announced unaudited financial results for Q2 FY '24 along with half yearly results of financial year '24. The key performance highlights for the quarter and the half year ended 30th September '23 have already been disclosed.
NTPC had another remarkable quarter with a strong operational and financial performance. We have made significant progress on various strategic initiatives, including renewables. Regarding the operational highlights for Q2 and H1 financial year '23.
During H1 financial '24, NTPC has added 1,570-megawatt commercial capacity to its portfolio. Out of which a capacity of 110 megawatts was added from the renewable sources. As on 30th September '23, the commercial capacity of NTPC stands at 57,838 megawatts on a stand-alone basis and 73,824 megawatts for the group as a whole.
NTPC Group generated 212 billion units in H1 FY '24 as compared to 204 billion units in H1 financial year '23, an increase of 4%. NTPC's stand-alone gross generation in H1 financial year '24 is 179 billion units as compared to 176 billion units in corresponding previous period.
During H1 FY '24, PLF &F of the coal stations of NTPC was 76.62% as against the national average of 68.75%. For H1 Financial year '24, 3 coal stations of NTPC Group, Rihand, Singrauli and Bhilai were among the top 10 performing stations in the country in terms of plant load factors.
During the H1 financial year '24, there has been lower generation due to grid restrictions of 46 billion units against 40 billion units in the corresponding previous year. There was a negligible generation last year to fuel supply against 2 billion units in the corresponding period of the previous year.
Regarding the status of fuel supply. During H1 FY '24 materialization of coal against annual contracted quantity in Q2 was 95.80% as 19.93% in the corresponding previous period. Coal supply during H1 financial year '24 was 113 million metric tonnes, including 4 million metric tonne of imported coal. The coal supply during the corresponding previous period was 112 million metric tonne including 10 MMT of imported coal.
NTPC has registered highest ever coal production of 16.06 million metric tonnes in H1 FY '24 with growth of over 83% as against 8.76 MMT in H1 FY '23. Cumulative expenditure of INR 10,095.34 crores has been incurred on the development of coal mines till 30th September 2023.
Now I will update some of the financial activities of the company. Total income for Q2 financial year '24 is INR 41,517.87 crores as against INR 41,810.96 crores in the corresponding quarter of the previous year. On a half yearly basis, the total income in H1 FY '24 is INR 81,198.56 crores as compared to INR 81,536.63 crores in H1 financial year '23. Profit after tax for Q2 FY '24 is INR 3,885.01 crores as against INR 3,331.20 crores in the corresponding quarter of previous year, registering an increase of 16.62%.
On a half yearly basis, PAT is INR 7,951.05 crores as against INR 1,048.16 crores in H1 FY '23, registering an increase of 12.81%. Total income of the group for H1 financial year '24 is INR 88,774.66 crores as against INR 88,242.22 crores in the corresponding previous period.
Profit after tax for group for H1 FY '24 is INR 9,633.53 crores as against the corresponding period previous period of PAT of INR 7,395.44 crores, registering an increase of 30.26%. During H1 FY '24, our subsidiaries have earned a profit of INR 1,117.36 crores as compared to INR 867.65 crores in the corresponding period of previous year, registering an increase of 28.78%.
NTPC's share of profit in JVs has increased from INR 120.57 crores in H1 FY '23 to INR 10,82.25 crores in H1 FY '24. During H1 FY '24, we have accounted dividend income of INR 549.98 crores as against INR 640.94 crores during H1 FY '23. The regulated equity of NTPC as on 30th September 2023 was INR 81,498 crores on a stand-alone basis and INR 98,050 crores on a group basis.
As regards to funds normalization, the current quarter, NTPC has signed term loan agreement of INR 5,000 crores with Citibank. Average cost of borrowings during H1 FY '24 is 6.67% as compared to 6.22% in H1 FY '23. Regarding capital expenditure. In H1 FY '24, we have incurred a group CapEx of INR 13,203.60 crores as compared to INR 16,664.19 crores in the corresponding previous period. The capital outlay of NTPC stand-alone has been estimated at INR 22,454 crores for financial year '24.
I would like to highlight a few other important issues. NTPC Group has a strong commitment towards renewable energy. We have already commissioned 3,314 megawatt of RE projects. Presently 7,258 megawatt of RE projects are under construction. Furthermore, we have secured tender and bilateral tie-ups for another 10 gigawatt of renewable capacity, creating a visible pipeline of the 20 gigawatt in the near term.
MOU has been signed between NTPC Green and UPRVUNL, for the development of RE projects in Uttar Pradesh. Similar MOU was also signed with HPCL Mittal Energy Limited for the development of RE projects and green hydrogen derivatives. MoU was also signed with ONGC and Oil India Limited for renewable energy projects to explore collaboration in areas of renewable energy, green hydrogen and its derivatives, geothermal, et cetera.
As part of our overall energy security plans, we are actively considering awarding thermal capacity of 11.2 gigawatts an [ extra skill ]. This is in addition to the 10 gigawatt thermal capacity already under construction for the group. Furthermore, to have a fuel security, we are enhancing our coal mining capacity as well. Business transfer agreement for transferring mining assets from NTPC to NTPC Mining Limited, a wholly owned subsidiary of NTPC was signed on 17 August '23 at New Delhi. Also the auction process of commercial coal blocks notified by Ministry of Coal and was declared as preferred bidder for North to East coal mines having an estimated geological reserve of 439 million tonnes.
Going higher on generation, lowering GHG intensity to remain our motto for environment management and drives our efforts to comply with new environmental norms. We have taken significant steps to control Sox and NOx emissions. Over the next 3 years, we have planned to commission FGD systems for our entire operational and under construction capacity, ensuring a substantial reduction in Sox emissions.
With respect to ash utilization, NTPC and JV station achieved 100% ash utilization. NTPC average ash utilization is 77.666%. 2,700 million tonnes of ash was transported in containers on BLC rates from Khargone, which is the first of its kind in India for ash transportation. Lastly, CSR initiative, NTPC has adopted Archery Sports in India with an objective of scouting for talent in remote part of India and nurturing them through coaching camps to enhance India's presence in the sports internationally. Indian Archers have had 9 medals ,5 Gold, 2 silver, 2 bronze in the recently held 19th Asian. Also the India archers shut their way to second rank by dragging 4 medals, 2 gold, 1 silver, 1 bronze in the Archery World Cup stage, held in Antalia from 18th to 21st April '23. NTPC has been recognized as some of the world's best employer 2023 in the Forbes World's Best Employer list 2023. It ranked 261 out of the top 700 companies in the world ranking and is the only Indian PSU to create. NTPC Limited has been conferred with Asia's best employer award 2023 at the Asia's best employer brand award held on 17 August 2023. NTPC bags 5 awards at the fifth edition of CII Digital transformation awards posted by CII Tata Communications Center for Digital Transformation. NTPC has been awarded Technology Transfer Award 2022 in generation sector by Electric Power Research Institute, EPRI for incorporating assessment and benchmarking tool for flexible operations. These are some of the key highlights I wanted to share before we begin the question-and-answer session. . And I now hand over to B&K for further proceedings.
[Operator Instructions]
Yes, but some interception we could hear some discussions. Can you what happened last time also. There is a lot of disturbance. Somebody is talking in between. Can you just check?
Yes, sir, I'll check on that. [Operator Instructions] Excuse me, sir. There is a background disturbance from the management line.
Management line.
Yes, sir.
Okay. We like to deal with this. Okay, fine. Carry on. Are you not able to hear that?
So we can hear, but we are able to hear it. The first question is from the line of Mohit Kumar from ICICI Securities.
My first question is on the thermal coal pipeline. You Just mentioned that you are looking to award 11.2 gigawatt. How much is coming in stand-alone? How much is coming in [indiscernible] and are we looking to award and how much you're looking award in this fiscal? And if you can name those power plants, it will be very helpful.
11.2 gigawatt, which you mentioned, I name the projects. This will be Singrauli 3 1,600 megawatts, which is expected to be tendered out in the Q3 of the current fiscal. Sipat 3, again, the same period, 800 megawatt, Darlipali, unit 1.
In fact, we are going to add 11,200 megawatt awards by financial year '24, '25 and 50% will be stand-alone and 50% for JV.
I'll just respond to this question about the new thermal capacity plant. Out of the total 11.2 gigawatt that is planned, 50% would be -- are coming from NTPC stand-alone and the remaining 50% would be through joint venture subsidiary. And this would be tendered out progressively over the next 12 months, I can say.
Does this include Lara or is it excluding Lara?
Lara has been awarded. Lara has been awarded thus far.
Understood, sir. My second question is, sir, how do H1 was slightly bit muted in terms of renewal bidding? How do you see the renewal bidding pipeline and opportunity, which will go will conclude in H2 and provide us to get opportunity for us?
Mr. Mohit Bhargava, our EDRE, NGEL CEO, will take this question.
I'm not very still Clear to the pipeline has already been disclosed by Dr. Finance. My question is on the bidding pipeline. So because the H1, I think bidding was slightly muted for renewables by all the agencies. My question is how is the pipeline looking like at this point of time? And how do you expect this to the -- in terms of gigawatt to close by end of fiscal?
So as far as the bidding pipeline and directed by the Government of India is concerned, I think about which have already been announced by the agencies, including about 5 gigawatts from NTPC. And the target is that all the 50 gigawatts would be bit completion would be done by the end of March. So that's how the things planned, because now all the various guidelines, bidding guidelines, the pulling guidelines and all of those have been issued.
Understood. Sir, my last question is what was the regulated equity at the end of H1 for the stand-alone and consol?
The regulated equity at the end of last quarter was INR 81,498 crores on a stand-alone basis.
Anything of consol available or?
Consol is 98,050.
The next question is from the line of Apoorva Bahadur from Goldman Sachs.
Can you share the fixed cost under the some figures for 1H and 2?
The fixed cost under recovery for Q2, you want or Q2 is INR 381 crores.
Okay. Fair enough. I think that's confirm. Sir, I wanted to understand the kind of coal inventory, I mean what you can see for data, is that just a bit tariff? How do you see this panning out going ahead for the rest of the year?
You'll have to repeat. Probably the line is not very clear. We are struggling to hear you a little bit. .
Sorry. I hope I am audible now?
Slightly better, yes.
Yes, sir. So I wanted to inquire about the whole inventory at power plants. There has been some guidelines as per data. How do you see the rest of the year panning out, especially for our non power plants?
Right now, the coal stock is around 83 stations, although the picture is not the coal stock is less. Going forward, generally coal receive would increase from now onward. Yes, it is a little tight, but we expect the coal stocks to pick up from end of this month onwards. Go ahead.
Sir, sorry, the scheduled maintenance for all our coal plants can be done or something in Q3 as well?
Something will be due in Q3 and Q4 also because we have a lot of units. So we except for the government direct that not to take some overhauling in the month of April and mid of May. We have started taking overhauling every month and it's going up.
Okay, sir. So by the end of the year, the total 6% recoveries should.
We should be near around INR 200 crores.
The next question is from the line of Nikhil Nig from Alliance Bernstein.
My question is on the renewable side. I wanted to understand if there is any update on the instrument envisage in the renewable business and plans to lift the renewal business trajectory?
Do you want -- the projected investment in the renewables?
No, sir. So there was a plan to get an investor -- separate investor into the renewable prio and then list the renewable business separately as an entity? If there's any update on that.
Yes. See, we have broadly some plans for unlocking some value, either by way of a stake sale or an IPO route. However, we are working towards that. But as you know that we have a pipeline of renewable projects. 3 is already operational, 6.2 is under construction and another 11 gigawatt in different stages. So we'll be working on that.
And by 1.5 years or 2 years, there should be a substantial capacity on ground. So when we reach a certain critical marks, we will time it. So right now, we are working towards that, but we'll be exploring the market, looking at the conditions and deciding on the timing.
Got it. Understood, sir. Sir, the second question I had was storage -- on storage. There is a lot of news around plans to set up pumps, which -- and the government [ scheme ] as well. I wanted to understand if there is any update on the storage front, and out by NTPC as well on storage. So any update you can share on plans on pump storage or otherwise. .
On the pump storage, I will give you a snapshot. Government had identified Government of India last year 11,550 megawatts and across Maharashtra, Andhra, Tamil Nadu and Karnataka and identified NTPC as possible developers subject to government of that particular state agreeing into. Out of the 11,550, we have gone into the PFR and also acceptance or dropping some of the lease. So we are now targeting half of that 5,300. Meanwhile, we have been identified other 8,500 megawatts of capacity, Gujarat, Himachal, Meghalaya, Chattisgarh, and Madhya Pradesh and feasible capacity is 100% of that.
So if we add well, today, we have around 14,000 megawatt of pump storage capacity ready to be signed with the state governments at different stages, and we'll immediately start building up.
That's helpful. That's helpful. Sir, visibility on time line, how long does this take over, there will be approvals and then construction. So how long would we start seeing on ground progress on this tentatively?
I'll tell you for a typical pump storage typically takes 2 to 3 years for the initial work because like any hydro, there are a lot of studies to be carried out. And the construction side will be on the order of -- it can be 3.5 to 4.5 years depending on the site and depending on the availabilities of river - on the river et cetera. So from today, if you take the most conservative view, it will be on the order of say, 7 to 8 years. And if it is most optimistic, it ends up on the order of say 6 years, that's position.
The next question is from the line of Abhishek Maheshwari from SkyRidge Wealth Management. .
Am I audible?
Yes.
Yes. So just I have only one question. It's regarding understanding your debt, your borrowing strategy. Sir, as you understand it, currently you're getting more than enough cash to sufficiently pay off all your CapEx expenses. And I understand that all the power projects are formulate basis are good PPAs are signed on formulate basis or some of debt in equity. But is it necessary for you to take that debt to financial project or can you finance it to your internal accruals also? So just wanted to understand, do you have a planned peak debt for your books? Or is it something that will keep coming on as you take new projects?
Right now, the company is debt to equity ratio is very comfortable. And as long as we are -- we keep investing on thermal side which is still a regulated business on a cost-plus basis. It benefits us to put 30% permissible equity over there, because it will fetch as a 15.5% returns presented. But as far as other business, nonregulated business is concerned, that will especially depend on the resource position generally on the renewable side, we go for 80-20 competition. But that remains that in the regulated business, even if you put more equity, it will be treated as a notional debt and you'll be getting only the weighted average rate of borrowings. So it doesn't pay you to put more equity into the regulated business.
Yes, that's why I was asking. And eventually for renewables only because that's the strategy going forward, right? So it's a bulk of expense, bulk of CapEx will be going into renewables. When -- does it make sense to finance it through your own sales rather than relying on debt?
Not very clear. Can you distance yourself from the mic a bit because it's bit echoing.
Okay. I'm sorry. So I'm saying was majorly talking about renewables only because since bulk of the CapEx is going to go into renewables, then does it make sense to financial renewable projects through your own internal accruals only rather than relying on the debt? Because you've enough cash as it'd expect and you're not looking at regulated businesses going ahead, right, regulated businesses.
No, we will have a judicious mix of that debt equity. Nobody will ever finance projects only to equity. So because we have other commitments also, we have other subsidiaries also. We'll be looking at new businesses. So from that point of view, whatever is the healthy mix, we will go for a healthy debt equity ratio.
The next question is from the line of Subhadip Mitra from Nuvama.
I got disconnected from the call earlier [indiscernible] Will you please help with the adjustment PAT number both for stand-alone and consolidated for the quarter?
Yes, we'll share with you the adjusted PAT. Adjusted PAT for Q2 financial year '24 is INR 3,497 crores, which was INR 3,601 crores in the last financial Q2.
So this is for the stand-alone?
This is for a stand-alone. Consolidated is not ready with me right now. Probably our team will share it with you later on.
Understood. Secondly, with regard to the ordering of the summer plants, which are currently in the pipeline, post Lara, if you can help us with the schedule of how much and which projects you anticipate to get ordered out on the BTG side, let's say, over the next 6 to 8 months or a year?
Award?
Yes, sir, the BTG award, the awarding of the...
Singrauli, 1,600 megawatts and Sipat 800 megawatt, Singrauli by December '23 and Sipat's by January or maximum February '24. And Sipat is trying to delay because of election which has been announced and everything is levels have completed in December itself. For next phase of Darlipali 1,800 megawatts that will come in June '24 and the 2,400 will come in September '24.
Major by that? Sorry I missed that.
September '24. And we have another 5,600 megawatt capacity line Telengana Phase [Foreign Language] megawatt, Cobra D expansion, 1,600 megawatts, that will be be done by NTPC through Urja Nigam Limited, our JV with UV and another 600-megawatt expansion, which will also be done through our JV with UP, Major Urja Nigam Limited. These will be done progressively in '24,'25 and definitely by fiscal '26 that's our target.
Okay. Perfect. That's very helpful. Lastly, on the renewables side, given that we have been able to expand our portfolio so well to 20 gigawatts over the last few months. Is there any target of what kind of numbers you would like to reach in terms of certain portfolio, let's say, by end of this fiscal or next year?
Presently, we have a 3.3 gigawatt commission capacity based on projects on hand, which has been awarded. So by financial year '26, we are expecting to have 15 gigawatts. We have a long-term target of 60 gigawatt by the end of financial year '32.
understood. So what you mean is that you are expecting to commission 15 gigawatt of renewables by FY '26. Is that correct?
That is right because around 11 gigawatt is under construction, 9 to 11 gigawatt is under construction.
I understand. In terms of growing the portfolio, sir, beyond the 20 gigawatt, would you have any rough target, let's say, by end of FY '24 or '25 that you are anticipating the 20 gigawatt to maybe grow to let's say, 30 gigawatt the end of next year or something like that? Any such target?
What do you want to know Subhadip?
Sorry.
What do you want to know Subhadip? You already know there's a pipeline of close to 50 gigawatts going to happen every year. So we'll obviously try to win some bids there. We're also talking to a couple of guys, but obviously, I can't give you a number right now.
The next question is from the line of Gaurav Lohia from Bowhead India Fund.The line for Lohia is disconnected. The next question is from the line of Nikhil Abhyankar from ICICI Securities.
Sir, my first question is, why was under recovery is high in Q2? And are there any specific reasons for it?
The under recovery is high in Q2 because we have taken overhauls. And these are overhauls were taken during this season. So therefore, it's under recovery is high. Going forward by end of the year, we'll be baking of this under recovery, and we'll have only around 200, 400 equities. That took far from Barauni and
Okay. And sir, recently, we had coal. So what is -- what are your views on that? And will it lead to some kind of an opportunity to sell on power exchanges?
The new grid code, yes.
The new grid code, yes, There are opportunities for us to sell on the exchange, and we are doing that. But there are also some concerns from degrid code, which have communicated to the regulator. And that is the continuos dialogue that we're having with the regulator on this.
Okay. And our renewable capacity addition for Q2 was almost if I'm not wrong, sir. And so are we facing on a difficulty in execution? And also you mentioned that you've got almost a lock-in capacity of 20 gigawatts and our target for FY '26 is 15 gigawatts. Sir, almost on 5 gigawatt won't be commissioned even in the next few years. So just throw some light on that.
So yes, in Q2 we didn't do anything because various clearances like sorting of modules outside India and we only got towards the end of Q1. So the target is to pick up pace in Q3 and the bulk of that will come in Q4. So that's the raget for this financial year. Regarding the 20 gigawatts, which is already under the pipeline, so our target is a broad -- the aim is to do around 5 gigawatts every year and this is what happening as I clarified earlier also by Mr. Srinivasan that we do -- we do around 4, 5 gigawatt every year and so that we are
The next question is from the line of Gaurav Lohia from Bowhead India Fund.
Am I audible?
You are.
Sir, just wanted to check what is the adjusted PAT for Q2 FY '22, you mentioned?
Adjusted PAT for Q2 is on a stand-alone basis, it is INR 3,497 crores. .
INR 3,497 crores and it was in Q1, sir?
Q1 INR 3,794 crores.
INR 3,794 crores. And sir, I understand that we don't have adjusted PAT for consol, but if you look at reported numbers, Sir, in the past, consolidated PAT as a percentage of stand-alone backlogs in the range of 100% to 105%. But in the last 2 quarters, it's been almost 20% higher than the stand-alone. Even if we include the that you have transferred to subsidiaries, the investment portfolio is experienced only 4% to 5% kind of side. So what is the delta coming due to sir?
Delta, essentially you know the profits from -- the share of profit from subsidiaries has been close to INR 250 crores variation. And the share of profit of joint ventures through equity method, we have a differential of 961. So this adds to around INR 1,200 crores variation, which goes on to adjusted PAT. And the other factor is that our was not there last year. So the COD was effective from 23rd December '22, which has also contributed to the higher results.
Sir, going forward, this difference would remain the same at the same levels? Would you remain at the same level at around 20% or it would come, because of let's say, reduction in JV profit or subsidiaries profit?
It should be in the range of 15% to 20%.
Understand, sir. And sir, what was the CapEx for the first half, sir, at a group level? First half at the group level?
CapEx today at the group level? At the group level, first half, we are around 47% H1. That is INR 13,204 crores and target is INR 28,373 crores.
INR 28,373 crores.
This is is the target and we are at 47%, right.
Understood, sir. I think in the Q1 analyst meet, you had said INR 27,000 crores for FY '24, right? So we have changed to INR 28,000 crores.
Yes, we keep on going upwards only and that's a growing company.
Sir, could you please give us the revised target for FY '25 and '26 also if there has been a change for those years as well?
Next financial year will be coming out before the budget because that is obligatory on a government company. We are working on it now and our FX target for next year will be remaining almost of the same range. But after that, that will also zoom further.
Understood, sir. And just last question, sir, just to be clear again, sir, this difference between consolidated PAT and stand-alone PAT will remain there in FY '25 as well, right, 15% to 20% kind of number?
That is our estimate.
But as of now you expect this continue.
The next question is from the line of Rajesh Majumdar from B&K Securities. .
So I had a couple of questions. One is what is the status of our pump side growth which is going on right now at THDC? It is supposed to be commissioned this year? And what is the expected profitability from that project?
THDC pumped hydro pjoject 1,000 megawatts. There are some last moment surprises at the tail end and now the issues have been settled and we expect pumps storage first unit to come on stream by January or late February and then progressively we're seeing.
Okay. And this is for a regulated return, right, this particular project?
Yes, yes. It's all cost plus only.
it's hydro are all cost plus.
Okay. And secondly, sir, could you give us the pipeline for the RE till FY '26, could you give us the pipeline for the capacity additions for thermal for the balance part of the year, '25 and '26? That's it from my side.
Balance quarter for '25, '26, just one second. Yes, in this year, we have already achieved 1,460 and for this year, we'll achieve further 1,480 and this is what I'm talking is all whole and do we achieve includes North Karanpura Unit 2 660, Telengana Unit 2, 800, Durgapur Unit 2 20 megawatt. For next financial year, we'll end up 5,240 megawatt capacity additions, which Barh unit 3, North Karanpura Unit 3, Patratu 2 units 1,600 megawatts and THDC Khurja both units having 20 megawatts and also, I'm expecting 1 to be commissioned in this fiscal year, but 24 to 25 megawatt will be commissioned. That makes it 5,240.
And '26, sir?
'26, our production is going to be seen here because all the capacity now will just now awarded which start getting commission from '27 onwards. In '26, it will be roughly 1,764. This will include THDC 40 megawatt and Patratu 1 unit last 800. And hopefully Tapovan Vishnugad megawatt.
The next question is from the line of Dhruv Muchal from HDFC AMC.
Sir, you mentioned that you are 14 gigawatt of pumped hydro project.Now assuming that you get the financial closure done and the ET FD cleared over a period of time. How many of these projects do you have go ahead from the state government to start constructing if all these procedures are done already? I mean, already have approvals from the state government?
I told you that out of this 1,400, roughly 6,000 that have been identified by Government of India and downgraded to NTPC. And among that, we have already discussed with Tamil Nadu, which is going for the cabinet approval now sign the agreement with them. The rest of the projects are roughly 8,000 megawatts. These are at various stages of identification like in Himachal, there are 2 projects, 1,200 megawatts each, which is Koldam 1 and Koldam 2. These are very easy projects and only Himachal government should agree to award it to us. There are some issues going on regarding what you have been doing. So there are some deal in that front, but we expect to get it soon. Karnataka, we are negotiating at the last stage for Netravati, and we are also discussing for some more projects with Karnataka. Maharastra, we have already identified that we are discussing with them around 800 megawatt immediately and maybe another 2,000 megawatts going forward.
Then we are also discussing with Meghalaya. We have signed an MoU for around 3,100, but we are in a process of preparing the. Chattisgarh, 1,200 megawatt we are discussing for joint venture route. And Madhya Pradesh, 800 megawatt has been identified. Gujurat, 1,000 Megawatt. These are at the different stages of brief report and we have sounded the state government. And while some of the test governments like Meghalaya signed an MoU, which is given, rest of the cases except Gujurat, where Gujurat has interest, that's why we moved things. So you can say 3,100 plus 4,100 is also are de facto registered at the different stages of negotiation.
Got it. This is helpful, sir. Sir, just on renewables, you mentioned that there are 9 to 11 gigawatts of projects which are under construction. Sir, just to clarify, which means that you have already awarded the EPC contract and probably some type of modules? Or what stage are they?
Clarified that about 3.5 gigawatt was already operational and other 7 gigawatts is under construction. So that adds up to 10 is that is what you're..
Yes. I think when you refer to under construction of...
Let me say under construction. So we've already placed the EPC award or the balance of system award. So what is being instituted on the ground.
Got it. So that means they would be commissioned over the -- at least this much should be commissioned over the next 18 months or 24 months?
Wherever we have started to go, the target is to complete it by max 24 months, if not earlier.
Sir, one more question was on the thermal addition. Now we are seeing some tightness in the power market and probably government is also pushing a lot. Sir, is there any scope to what we see from the current ordering is that it takes about 4 to 5 years to execute these projects, therma projects, even they are brownfield yet. So is there any scope to quick in this probably in -- I'm not sure, 3.5 years, 4 years or whatever. Is there any scope to do that what you think is 4, 5 years is the best possible that can be done?
As an optimistic credit manager, I will say it is there, the scope is always there and we'll try everything to do it. But in Indian context wise, I tell you, there are some basic problems that we face. First of all, the first 2 years when we are doing not subsidiaries, the 4 months of rainy season obviously takes away the 8 months from the schedule. So even if I do it in 4 years, I am effectively doing it in 40 months that you have to understand.
Second is some of the projects, depending on the accessibility logistics, some time are required extra like in one of our projects, the generator stator still was start-up for each month. So project specific only I can tell you whether I can prepone or postpone. Like thermal, which is under construction now, which we have last year. We have a very optimistic position even after 14 months of what things are doing 4 months of schedules. If that gives you some kind of reasons to stay here, that's good.
This is helpful. And sir, last clarification. In your previous questions, you mentioned that the gap between consol and stand-alone should be about 15%, 20%. But just to understand, sir, because all the renewables coming up in subsidiaries, which will add only in the consolidated profit. Shouldn't this gap only increase every year, this 15%, 20% probably increasing every year?
So I have indicated because there are several JVs and subsidiaries and the net figure that would emerge would depend on the interplays and peculiarities of each year's financials. So it would only be fair to assume that it would be around 15% to 20%. But again, it depends on several factors.
Because I was wondering all the renewables and a large part of the renewable is coming up in the next 2 years also so that will add to the subsidiary numbers from that time. But no, I will probably get in touch later. .
The next question is from the line of Atul Tiwari from Citi.
Sir, on these 14 gigawatt of ESP project, will you be signing regulated ROE PPA or is it like a fixed tariff for the per kilowatt hour of power?
The project that we are developing will be developing mostly through the cost the CST model. That is what we are discussing and Government of Tamil Nadu, Government of Karnataka, everybody.
Okay. So sir, in the cost-plus model, I mean, what is the ROE or ROCE you are discussing on the employee equity or capital?
We have to discuss on project to project basis. There are 3 different types of console and cost, generally, the PSP also follows the same ROE that is allowed under the regulation for a hydro project.
And sir, any idea about the cost of the storage. I mean, after, say, allowing for 16% ROE, what is the per unit cost of the storage currently? Cost of the customer I'm asking?
The cost of storage costs will be up on and around 4.5, it will be around INR 3.5.
3.5 to 4 roughly? Okay. So about INR 3.5 to INR 4 roughly?
Only the storage. The figure that was indicated purely the storage, what is called as the price adder. You'll have an inherent tariff for that and all put together could be in the range of 7.25 to 8.25.
Storage is the cost, which is in my consol. So that will be on a 3.4 to 4.4, depending on the type of project and location.
That was the last question. And I'll now hand the conference over to the management for closing remarks .
Thank you. On behalf of NTPC management, I would like to thank all of you for participating in this conference call for the Q2 financials. Thank you so much. .
On behalf of B&K Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.