As capacity additions gather steam, fuel supply concerns emerge at NTPC

Over the past month, shares of NTPC Ltd have remained powerless, down about 7%. The company said last week that it added 1,320 megawatts (MW), which takes it closer to its annual capacity target of 5,000MW. The capacity additions augur well, though, and the firm’s regulated business model assures a fixed return on invested equity.

Still, the stock’s lacklustre reaction implies investor concerns about earnings. As pointed out in previous columns, NTPC’s earnings have in recent years barely kept pace with capacity additions.

Fuel security for one of the newly added plants (Unit-1 of the Khargone super thermal power station) depends on a production ramp-up at one of NTPC’s captive mines, points out Motilal Oswal Financial Services Ltd.