NTPC to Raise Rs 12,000 Crore via NCDs

NTPC is India’s largest energy company, founded in 1975 to expedite power development in the country. Over the years, it has emerged as a leading player in the power sector, operating across the entire power generation value chain.  State-owned power giant NTPC will seek shareholder approval to raise up to Rs 12,000 crore through the issuance of non-convertible debentures (NCDs/bonds) on a private placement basis in its annual general meeting on August 29.  The board of directors of the company, in its meeting held on June 29, 2024, approved the proposal and recommended the passing of the proposed special resolution (to raise up to Rs 12,000 crore in the next 12 months), as stated in the AGM notice of NTPC.  This move by NTPC reflects the company’s strategic approach to financing its growth plans. By seeking approval to raise funds through debt instruments such as NCDs and bonds, NTPC is ensuring that it has the necessary resources to fund its capacity expansion projects. This will not only help the company meet its capital expenditure requirements but also enable it to take advantage of favorable market conditions for raising funds.  The decision to offer a mix of secured/unsecured, redeemable/non-redeemable, taxable/tax-free debentures provides flexibility in structuring the fundraising exercise. It allows NTPC to tailor its debt offerings to suit the preferences of different investor segments and optimize its cost of capital.  Overall, this move demonstrates NTPC’s proactive approach to managing its financial resources and underscores its commitment to sustainable growth and value creation for shareholders. The shareholders’ approval will empower the board of directors to execute this fundraising strategy effectively and support NTPC’s long-term strategic objectives.

NTPC Q1 FY25 result:

NTPC announced double-digit growth in income and profit in the first quarter of fiscal 2025, surpassing analysts’ expectations.Strong revenue from the power generation business and improved operational performance were the driving forces behind this.  The government-owned power company disclosed a 12.6% increase in consolidated revenue, reaching Rs 48,521 crore in the April-June quarter, up from Rs 43,075 crore in the corresponding period last year. Revenue from thermal power generation also saw a 14.1% growth, amounting to Rs 43,660.54 crore. The stock has declined by 33.98% year-to-date and 90.41% over the past 12 months.

NTPC stock price move:

NTPC is trading at a price of Rs. 417.05 right now and is just 0.5% up in the intraday segment as the market looks choppy.

Conclusion:

NTPC, the government-owned company, is raising funds for expansion, which can be a strategic move for the long term.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.