| NTPC Limited | ||||||||||||||||||||||||
| Rated amount enhanced for Bank Debt | ||||||||||||||||||||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||||||||||||||||||||
| 1 crore = 10 million | ||||||||||||||||||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL AAA/Stable/CRISIL A1+' ratings on the existing debt instruments, bank facilities and fixed deposit programme of NTPC Ltd (NTPC). Also, CRISIL Ratings has partially withdrawn its rating on commercial paper of Rs. 8,000 crore, bonds of Rs 2,108.67 crore as well as non-convertible debentures (NCDs) of Rs. 4,374.10 crore (see ‘Annexure - Details of Rating Withdrawn'). The withdrawal is based on independent confirmation of redemption of these instruments and at the company’s request, in line with the CRISIL Ratings withdrawal policy.
The ratings factor in the strong operating performance of the company for the fiscal year 2023 and first nine months of current fiscal 2024. The plant load factor (PLF) for coal-based capacity is strong at 76.40% in 9M-FY2024 (75.90% in FY2023) and is expected to remain healthy over the medium term, driven mainly by robust power demand in the country. Moreover, the coal and gas-based plants reported above normative plant availability factor (PAF) of 90.92% and 92.64% respectively for the same period (92.60% and 89.62% PAFs, respectively, in fiscal 2023).
The capital expenditure (capex) intensity at the consolidated level has remained strong with ~3.3 GW of thermal capacity addition in FY2023, and 1.6 GW in 9M-FY2024. The company has planned thermal capacity addition of ~18 GW over the next three years. Furthermore, the NTPC group has operational renewable capacity of 3.3 GW as of December 2023, with an additional 7.8 GW in various stages of construction. Annual capex of Rs 30,000 crores over the medium term is planned to be funded in debt equity mix of 70:30 in line with central electricity regulatory commission’s (CERC) guidelines. NTPC has an experienced management team which has demonstrated a healthy track record of commissioning of greenfield / brownfield capacity expansion across thermal and renewable segments, which provides comfort. That said, any material delays in implementation of the planned capacity expansion leading to cost overruns adversely impacting the financial profile will remain a key monitorable going forward.
The ratings continue to reflect the company’s dominant position in the power generation sector in India, strong business and financial risk profiles, and strategic importance to the government of India (GoI). These strengths are partially offset by weak credit risk profiles of customers. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of NTPC and its subsidiaries, associate companies and joint ventures, because they have strong operational and financial linkages. (Refer to annexure for the list of entities considered and the analytical treatment of consolidation.)
The ratings factor in expected support from GoI. CRISIL Ratings believes NTPC will, during exigencies, receive distress support from the government for timely debt servicing, considering its strategic role in meeting a quarter of India’s power generation and GoI’s 51.1% stake in the entity as on December 31, 2023.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Dominant position in the domestic power generation sector NTPC is the largest domestic power generation company, accounting for ~17% of the overall installed capacity as on March 31, 2023 (consolidated capacity stood at ~ 71.5 gigawatt [GW]), and ~25% of the power generated in fiscal 2023. Consolidated capacity stands at 75.4 GW as of 1st March 2024. The company has been adding capacities through greenfield and brownfield capacity expansions as well as acquisitions. Moreover, the company has planned capacity addition of ~18 GW in the three fiscals and plans to reach ~130 GW by fiscal 2032. The company shall retain its dominant position in the power generation sector over the medium term.
Strong business risk profile NTPC’s thermal capacities are fully backed by long-term power purchase agreements (PPAs). The PPAs are based on the classic two-part tariff structure of Central Electricity Regulatory Commission (CERC), which ensures complete recovery of fixed expenses, including debt servicing charges. It also provides fixed return on equity based on achievement of normative PAF mandated by the regulator, which NTPC continues to maintain. In fiscal 2023, the coal and gas-based plants reported 92.60% and 89.62% PAFs, respectively (against 88.49% and 89.08%, respectively, in fiscal 2022), well above their mandated normative levels. The PAF levels remained strong in the nine months ending December 2023 and are expected at similar levels over the medium term.
PLFs of coal-based power plants increased to 75.90% in fiscal 2023, driven by increase in power demand, from 70.94% in fiscal 2022 which was impacted by the Covid-19 pandemic. With increase in economic activity and heat waves, PLF rose to 76.40% in the nine months ending December 2023.
Healthy financial risk profile Consolidated gearing improved to 1.49 times as on March 31, 2023, from 1.58 times in fiscal 2022 despite large capacity expansion owing to timely repayment of long-term borrowing and reduction in short-term borrowing driven by easing of receivables. The gearing is expected at a similar level over the medium term aided by yearly capacity expansion plan of 5-6 GW with a funding mix of 70:30 (as prescribed by CERC). Liquidity is strong driven by cash accrual of Rs 26,775 crore and the ability to raise funds while consolidated cash and equivalent was moderate at Rs 4,989.9 crore as on December 31, 2023.
Strategic importance to GoI NTPC has been accorded the Maharatna status. As part of its divestment plan, GoI has pared its shareholding in NTPC over the past several years. However, the government remains the majority shareholder with 51.1% as on December 31, 2023. It will continue to provide need-based financial support, through guarantees, for foreign currency borrowing. Also, it accounts for nearly a fourth of the power generated in the country.
Weakness: Weak credit risk profiles of customers The company is exposed to risks related to delay in payments from counterparties, which are mostly state power distribution companies (discoms) that have weak credit risk profiles; thus, timely collection of receivables is a key monitorable. Collection efficiency of NTPC has been strong, and hence, receivables (excluding unbilled revenue and bill discounting) were small at less than 40 days in fiscals 2018 and 2019. However, delays in payment from counterparties resulted in increase in receivables to 68 days in fiscal 2020. Receivables reduced to 59 days during fiscal 2021 and further moderated to 45 days as on March 31, 2022, with disbursement of funds to discoms under the Atma Nirbhar package. As on March 31, 2023, receivables further moderated to 40 days.
The receivables position is expected to moderate further as the company has started receiving payments under the new Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. Moreover, presence of payment security mechanism such as letters of credit and tripartite agreement between NTPC, state governments and the central government to recover the dues from defaulting state power utilities (SPUs), through the Reserve Bank of India (RBI) devolution to state governments provides comfort. |
Liquidity: Superior Liquidity will remain strong over the medium term supported by cash accrual of over Rs 25,000 - 26,000 crore, ability to raise funds, and cash and equivalent of Rs 4,989.9 crore as on December 31, 2023. The bank limit (Rs 3,000 crore on standalone basis) was unutilized as on December 31, 2023. The cash and equivalent, annual cash accruals and ability to raise funds should be adequate to cover yearly debt obligation, equity portion of capital expenditure (capex) and working capital requirement over the medium term.
Environment, social and governance (ESG) profile CRISIL Ratings believes NTPC’s ESG profile supports its already strong credit risk profile. The power sector has a significant impact on the environment owing to higher emissions, water consumption and waste generation. This is because generation of conventional power involves high dependence on natural resources, mainly coal. The sector has a social impact as its operations affect local community and involve health hazards. NTPC is focused on mitigating its environmental and social risks.
Key ESG highlights
There is growing importance of ESG among investors and lenders. The commitment of NTPC to ESG principles will play a key role in enhancing stakeholder confidence, given high share of market borrowing in its overall debt and access to both domestic and foreign capital markets. |
Outlook: Stable CRISIL Ratings believes NTPC will continue to maintain its dominant position in the domestic power generation sector, underscoring its strategic importance to GoI. The credit risk profile will remain healthy, supported by efficient operations, regulated tariff structure and comfortable debt protection metrics. |
Rating Sensitivity Factors Downward Factors
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About the Company NTPC was incorporated in 1975. As on March 01, 2024, the company had installed power generation capacity of 75.418 GW, including capacity owned by subsidiaries and joint ventures. This includes 61,734 MW of coal-based capacity, 6,511 MW of gas-based and 3,725 MW of hydropower, with the balance comprising other renewable energy. The company has been conferred the Maharatna status by GoI, which had 51.1% shareholding as on December 31, 2023.
As on December 31, 2023, consolidated total income was Rs 1,30,878 crore and profit after tax (PAT) was Rs 14,842 crore, against Rs 1,31,954 crore and Rs 12,249 crore, respectively, a year earlier. |
Key Financial Indicators*
*As per analytical adjustments made by CRISIL Ratings |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
$equivalent to JPY 36804.79 million at an exchange rate of 0.5556 $$equivalent to JPY 10765.79 million at an exchange rate of 0.5556 $$$equivalent to EUR 75.35 million at an exchange rate of 91.52 $$$$equivalent to USD 350 million at an exchange rate of 83.63 $$$$$equivalent to USD 275 million at an exchange rate of 83.63 $$$$$$equivalent to USD 25 million at an exchange rate of 83.63 $$$$$$$equivalent to JPY 42,330 million at an exchange rate of 0.5556 $$$$$$$$equivalent to JPY 14,110 million at an exchange rate of 0.5556 $$$$$$$$$equivalent to EUR 685.18 million at an exchange rate of 91.52 $$$$$$$$$$equivalent to USD 1028.88 million at an exchange rate of 83.63 ^Fully Interchangeable within Non-fund based limits (Bank Guarantee / Letter of Credit) & interchangeability of Rs.500 Cr. from Non-fund based to Fund based towards Cash Credit from Consortium Banks @Against SBI cash credit limit of Rs 2,499.94 crore, Rs 1,500 crore utilised in the form of commercial paper / STWCL (through SBI) as per RBI guidelines **Fully interchangeable with cash credit, overdraft, bill discounting, factoring, and fund based/non fund based limit. &CRISIL Ratings has rated Rs 15,000 crore of non-convertible debentures, against which the company has issued non-convertible debentures of Rs 13,671 crore so far #Yet to be issued ##Rs 10,600 crore + Rs 1,500 crore against cash credit limit in terms of the RBI circular **Fully interchangeable with cash credit, overdraft, bill discounting, factoring, and fund based/non fund based limit.
Annexure - Details of Rating Withdrawn
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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$equivalent to JPY 36804.79 million at an exchange rate of 0.5556
$$equivalent to JPY 10765.79 million at an exchange rate of 0.5556
$$$equivalent to EUR 75.35 million at an exchange rate of 91.52
$$$$equivalent to USD 350 million at an exchange rate of 83.63
$$$$$equivalent to USD 275 million at an exchange rate of 83.63
$$$$$$equivalent to USD 25 million at an exchange rate of 83.63
$$$$$$$equivalent to JPY 42,330 million at an exchange rate of 0.5556
$$$$$$$$equivalent to JPY 14,110 million at an exchange rate of 0.5556
$$$$$$$$$equivalent to EUR 685.18 million at an exchange rate of 91.52
$$$$$$$$$$equivalent to USD 1028.88 million at an exchange rate of 83.63
^Fully Interchangeable within Non-fund based limits (Bank Guarantee / Letter of Credit) & interchangeability of Rs.500 Cr. from Non-fund based to Fund based towards Cash Credit from Consortium Banks
@Against SBI cash credit limit of Rs 2,499.94 crore, Rs 1,500 crore utilised in the form of commercial paper / STWCL (through SBI) as per RBI guidelines
**Fully interchangeable with cash credit, overdraft, bill discounting, factoring, and fund based/non fund based limit.
Criteria Details
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