---
endpoint: analytics
pattern: Power
status: done
latency_ms: 163678
conversation_id: d6b197da-8bc1-44e7-abbf-40bd61f4ec69
citations: 4
created: 2026-05-31 18:35:44Z
---

# What are the key risks to NTPC’s growth trajectory?

# Key Risks to NTPC's Growth Trajectory

NTPC is positioned by CLSA as the "best transition play" in Indian power with an Outperform (O-PF) rating, but the May 2025 update on NTPC's results and the June 2025 India Power Pulse note flag several risks that could derail the company's ambitious growth trajectory (the title of the May initiation update — "Lofty guidance" — itself signals execution skepticism)[3].

## 1. Execution Risk on Capacity Additions (Most Critical)

CLSA explicitly identifies the core investment risk as: **"Delays in equipment ordering/capex, lower utilisation rates, and lower incentives at the company's coal-based power plants could lead to a structural slowdown in NTPC's earnings growth as well as a peak in its ROE"**[1].

Evidence this risk is already materializing:
- **Regulated equity (the key driver of NTPC's regulated returns) grew only 4% YoY in 4QFY25 because large thermal plants missed commissioning timelines by 3–6 months**[2]. Because NTPC earns regulated returns on equity (ROE) on a regulated equity base, slippage in COD directly suppresses earnings growth.
- **Lofty renewable guidance**: NTPC has targeted **60GW renewables by FY32**[7], with annual run-rate ramping from ~2GW in FY25 to 7–10GW per year through FY34 — a step-change that the May 2025 report's title ("Lofty guidance") signals as ambitious[3]. Management itself acknowledged on the FY26 call that **"it was FY 2026 that we were planning around 5 GW and some of the units spilled over to the next year"**[9] — i.e., the first year of the ramp has already slipped.
- **Long-dated nuclear option**: The Mahi Banswara nuclear project (the only one currently under execution) has first pour of concrete only in **August 2027 and first unit synchronization in November 2032**[11] — so nuclear is not a near-term growth lever and any further slippage pushes returns well into the next decade.

## 2. Transmission Bottlenecks for the Renewable Build-Out

NTPC's renewable growth is gated by transmission connectivity, and the tie-ups remain incomplete for the planned ramp:
- **FY27: only 57% firm connectivity + 38% TGNA**; **FY28: 88% firm + 3% TGNA, with 9% still to tie up**; **FY29: 84% firm with 16% open**[9].
- Curtailment is already showing up in P&L: **NGEL experienced curtailment of 314 MUs during FY26, plus a TRAS loss of 135 MUs**, with **~INR 90 crore EBITDA impact from temporary-GNA-driven grid curtailment**[8]. As more solar comes online into a thinner peak-load window, this drag is likely to widen unless transmission keeps pace.

## 3. Demand-Side Volatility — Cooler Weather Risk

The thermal-heavy fleet is exposed to demand softness:
- **Base demand fell 12% YoY in May 2025**[5], and CLSA flags the recent slowdown — **driven by La Niña-led cooler weather — as a "key concern"**, though they characterize it as cyclical rather than structural[6].
- NTPC's portfolio is still **78% coal and 8% gas (97% conventional including hydro)** — so thermal PLFs and merchant pricing are leveraged to weather and industrial-demand cycles.

## 4. Thermal Fleet Operating-Flexibility Risk

Rising solar penetration is forcing NTPC's coal fleet to back down, raising operating risk:
- Analysts on the Q4FY26 call explicitly asked **"Are there core units which are having to face the challenge of hitting the technical minimum of 55% PLF during daytime when solar availability peaks?"**[10]. Below 55%, units become economically and technically infeasible to run.
- Mitigations (CERC technical-minimum compensation; co-located batteries — 5 GWh under work) help but do not fully offset the structural pressure on thermal load factors as RE penetration rises.

## 5. Regulatory / Tariff Risk — CERC Rate Review (FY24–29)

The CERC tariff review carries clearly identified **negatives for NTPC**:
- **Transmission ROE: prospective cut by 50bps on new blocks** (relevant via PWGR, but signaling regulator's directional bias)
- **Lower heat rate & auxiliary norms** — direct EPS drag for NTPC's thermal fleet
- **Lower working capital rates** — direct EPS drag
- **Accelerated depreciation lowered** to push for longer-tenure bonds and lower tariff — direct EPS drag for NTPC[4]

The positives (higher power ROE spread, O&M escalation, technical-minimum compensation) partly offset but the negatives are explicitly attached to NTPC.

## 6. Supply Visibility Constraint on Base-Load

CLSA highlights a structural delivery constraint that affects NTPC's growth window directly: **"New brownfield thermal power plants are at least four years away to support base load demand"**[5]. This locks in a multi-year COD lag — meaning every quarter of slippage on the current pipeline is hard to recover, and the upside case (additional thermal awards) takes >4 years to convert into regulated equity.

---

## Summary — Risk Hierarchy

| Risk | Severity | Already Materializing? |
|------|---------|------------------------|
| Commissioning slippage on thermal CODs | High | Yes — 3–6 month miss in 4QFY25[2] |
| Renewable build-out slippage vs 60GW FY32 target | High | Yes — FY26 spillover[9] |
| Transmission tie-up gaps (FY27–29) | High | Yes — curtailment cost INR 90cr in FY26[8] |
| CERC tariff cuts (heat rate, working capital, depreciation) | Medium | Already approved[4] |
| Power demand softness (weather/La Niña) | Medium | -12% YoY base demand May 2025[6] |
| Thermal fleet flexibility (55% technical minimum) | Medium | Active issue on Q4FY26 call[10] |
| Nuclear execution (long-dated) | Low-Medium near term | First sync Nov 2032[11] |

The unifying theme: NTPC's growth math depends on a **steep regulated-equity ramp from CODs that are already slipping**, while the **CERC framework is incrementally tightening returns** and **transmission/demand-side dynamics introduce additional drag** on utilisation. CLSA still keeps NTPC at O-PF on relative value vs more expensive utilities, but explicitly anchors the bear case in execution slippage + ROE peaking[1].

---
**Sources**
[1] NTPC – O-PF (Lofty guidance) — CLSA (25 May 2025) — 607960472LinqAlpha.PDF
[2] NTPC – O-PF (Lofty guidance) — CLSA (25 May 2025) — 607960472LinqAlpha.PDF
[3] NTPC – O-PF (Lofty guidance) — CLSA (25 May 2025) — 607960472LinqAlpha.PDF
[4] India Power Pulse (US NDR feedback) — CLSA (29 June 2025) — 607963001LinqAlpha.PDF
[5] India Power Pulse (US NDR feedback) — CLSA (29 June 2025) — 607963001LinqAlpha.PDF
[6] India Power Pulse (US NDR feedback) — CLSA (29 June 2025) — 607963001LinqAlpha.PDF
[7] NTPC – O-PF (Lofty guidance) — CLSA (25 May 2025) — 607960472LinqAlpha.PDF
[8] NTPC Limited, Q4 FY25/26 Earnings Call
[9] NTPC Limited, Q4 FY25/26 Earnings Call
[10] NTPC Limited, Q4 FY25/26 Earnings Call
[11] NTPC Limited, Q4 FY25/26 Earnings Call

## Citations

- [8] **NTPC Limited, Q4 25/26** · external
- [9] **NTPC Limited, Q4 25/26** · external
- [10] **NTPC Limited, Q4 25/26** · external
- [11] **NTPC Limited, Q4 25/26** · external

