Rs 2.5/Share Dividend: Maharatna PSU Power Stock NTPC Slips 4% Despite Strong Q2 Results; Buy Or Not?

The shares of NTPC fell 4% in early trading on October 25, 2024, despite the state-run power generator reporting impressive earnings for the quarter ending September 30, which surpassed market expectations. The company's consolidated net profit increased by 14% year-on-year (YoY) to Rs 5,380 crore for Q2FY25, reflecting strong operational performance. However, revenue from operations dipped slightly to Rs 44,696 crore compared to the same quarter last year.

As India's largest integrated power utility, NTPC plays a crucial role in meeting the nation's energy needs, contributing approximately 25% of the country's power generation. In the first half of FY25, NTPC generated 220 billion units (BU) of electricity, an increase from 212 BU during the same period last year. Its standalone gross generation also improved to 186 billion units, up from 179 billion units in the previous year.

Despite the overall positive earnings, NTPC experienced a decline in gross electricity generation during the second quarter, falling to 88.46 billion units from 90.30 billion units in the same quarter last year. However, the company's coal output from its captive mines saw a significant increase, rising to 9.03 million metric tons (MMT) from 5.59 MMT in the previous year. For the April-September period of this fiscal year, NTPC's coal production surged to 18.67 MMT, up from 11.83 MMT.

The Plant Load Factor (PLF), a measure of capacity utilization for NTPC's coal-based thermal power plants, decreased to 72.28% in the second quarter, down from 75.83% in the prior year. Nevertheless, the domestic coal supply improved to 54.75 MMT, up from 54.16 MMT in the same quarter last year. Notably, NTPC's coal stations achieved a PLF of 76.31%, exceeding the national average of 70.63% during H1 FY25.

NTPC's total installed capacity stood at 76,443 MW in Q2FY25, up from 73,824 MW a year earlier. On a standalone basis, the company reported an installed capacity of 59,168 MW, an increase from 57,838 MW in Q2FY24. To enhance shareholder value, the board of NTPC also approved an interim dividend of Rs 2.5 per share.

At 11:50 am on October 25, NTPC shares were trading around 4% lower at Rs 396.90 per share on the National Stock Exchange (NSE). Despite the dip, the stock has performed well overall, rising about 29% this year, significantly outpacing the Nifty's 12% return. Over the past 12 months, NTPC's stock has surged by 78%, compared to the Nifty's increase of 27%.