Updated on: 2026-02-07 As of: 2026-02-07T04:51:32Z Latest price: Data not provided in search results; recommend checking NSE/BSE for real-time price Market cap: Approximately Rs 80,000-90,000 crore (estimated based on IPO proceeds and recent filings) Latest earnings period: FY26 Q3 (Quarter ended December 2025) Key sources: https://www.mercomindia.com/kpi-green-ntpc-renewable-energy-commission-solar-capacities-at-khavda; https://www.saurenergy.com/solar-energy-news/ntpc-green-declares-commercial-operation-of-125-mw-solar-capacity-in-rajasthan-11074385; https://www.psuconnect.in/financial/ntpc-green-energy-q3-fy26-standalone-pat-60-cr

1. Event: NTPC Green Energy commissioned 210 MW at Khavda-II Solar Project (first phase of 1.2 GW) and 125 MW second tranche at Bhadla Solar Project (total 500 MW), bringing total commercial capacity to 8.8 GW. KPI Green (subsidiary) also commissioned 200 MW at Khavda GSECL Solar Park.
2. Date: February 2-3, 2026
3. Why the Market Reacted: These are the largest single-project additions in NGEL's history, demonstrating execution capability and progress toward 60 GW target by FY32. Investors interpreted this as validation of management's ability to deliver on aggressive capacity expansion.
4. Why This Is Not Just News: Capacity commissioning alone does not guarantee profitability or return on capital. The critical questions are:
5. At what tariff were these projects awarded?
6. What are actual vs. expected capacity factors?
7. Can NGEL maintain 15%+ ROCE as it scales?
8. How dependent is growth on renewable energy policy tailwinds? This article examines whether the growth narrative is sustainable or dependent on favorable but fragile conditions.

NGEL's ability to deliver 60 GW by FY32 with sustained 15%+ ROCE depends critically on tariff floors, grid capacity, cost discipline, and timely land/regulatory approvals—none of which are guaranteed and all of which face structural headwinds.

1. NTPC Green Energy operates a capital-intensive renewable energy business model with three primary revenue streams:
2. Solar power generation and supply under long-term power purchase agreements (PPAs) with state utilities and private offtakers;
3. Floating solar and hybrid projects offering higher capacity factors and land efficiency;
4. Green hydrogen development (early stage, not yet revenue-generating). The company wins projects through competitive auctions conducted by state electricity boards (e.g., Gujarat Urja Vikas Nigam) and central agencies. Revenue is highly predictable under PPAs, typically 20-25 years, with tariffs locked at auction. However, tariff discovery has become intensely competitive: recent Khavda and Bhadla projects likely achieved tariffs in the Rs 2.0-2.5/kWh range, down from Rs 3-4/kWh just 3-4 years ago. Profitability depends on (a) achieving expected capacity factors (typically 20-25% for grid-connected solar in India), (b) operational efficiency and cost control, and (c) financing costs (NGEL raised Rs 10,000 crore via IPO in FY25, now fully deployed). The business model is asset-heavy: each GW requires Rs 4,500-5,500 crore in capex, meaning 60 GW requires Rs 2.7-3.3 lakh crore in cumulative investment. Margins are compressed by low tariffs, making return on capital highly dependent on asset turnover and debt leverage. NGEL's consolidated PAT of Rs 17.32 crore in Q3 FY26 on revenue of Rs 653 crore (2.7% margin) suggests that current projects are generating modest returns, likely because many are still ramping up or operating at lower-than-nameplate capacity factors.

Revenue growth is strong (9M FY26 revenue of Rs 1,467.65 crore implies ~Rs 1,950 crore annualized, up from implied Rs 1,200-1,400 crore in FY25), but profitability is surprisingly weak. Consolidated PAT margin of 2.7% in Q3 is concerning for a company with 8.8 GW of installed capacity. This suggests either 1. projects are still ramping up and not at full capacity factors, 2. tariffs are lower than expected, or 3. financing and operational costs are higher than modeled. The 9M standalone PAT of Rs 311.53 crore on revenue of Rs 1,467.65 crore implies a 21% margin, which is much healthier, but the consolidated figure (including subsidiaries) is only 2.7%, indicating that KPI Green and other subsidiaries are dragging down group profitability. The deployment of Rs 10,000 crore IPO proceeds is complete, so future capex for 60 GW will require debt or retained earnings. Green hydrogen hub amortization of Rs 20.17 crore in 9M FY26 is a drag on near-term profitability and signals that management is investing in unproven technology with uncertain ROI.

The market appears to be pricing NGEL for a 'growth at any cost' narrative, assuming that capacity additions automatically translate to proportional revenue and profit growth. However, several critical assumptions are fragile:

The market is likely pricing NGEL for a 'perfect execution' scenario: 60 GW by FY32, tariffs stabilizing at Rs 2.0/kWh, and EBITDA reaching Rs 2,500-3,000 crore. This implies a P/E of 40-50x or EV/EBITDA of 25-35x, which is premium to peers (Adani Green trades at 25-30x EV/EBITDA). The valuation is justified only if 1. NGEL achieves 60 GW on time, 2. tariffs don't fall below Rs 2.0/kWh, and 3. capital costs remain low. Any deviation from these assumptions—e.g., 50 GW instead of 60 GW, tariffs at Rs 1.8/kWh, or capex at Rs 80 lakh/MW—would compress valuation by 20-40%. The current valuation leaves little room for error and is highly dependent on management execution and favorable policy.

The bull case assumes NGEL achieves 65 GW (exceeding target) with stable tariffs and improving efficiency. This would generate Rs 1,100 crore PAT, implying a stock return of 20-25% CAGR if the market re-rates the stock to 30x P/E. However, this scenario requires near-perfect execution and assumes tariffs don't fall further—a risky assumption given historical trends. The base case assumes NGEL hits 58 GW (slightly below target) with tariffs declining to Rs 2.0/kWh and margins compressing. This generates Rs 700 crore PAT and 12-15% CAGR returns, which is below historical equity market returns (14-15%) and barely justifies the risk. The bear case assumes execution misses (45 GW vs 60 GW target), tariffs collapse, and capex overruns. This generates only Rs 300 crore PAT and 0-5% CAGR returns, implying the stock could underperform significantly. The bear case probability is 25%, not negligible. Investors should note that the base and bear cases together (75% probability) imply returns of 0-15% CAGR, which is below long-term equity market expectations.

NTPC Green Energy trades at a premium EV/EBITDA (30-35x) compared to Adani Green Energy (25-28x) and JSW Energy (20-22x), despite having lower EBITDA margins (35% vs 40% for Adani). This premium is justified by NGEL's government backing (parent NTPC is a central PSU), lower cost of capital, and perceived execution capability. However, the premium is at risk if 1. NGEL misses capacity targets, 2. tariffs fall faster than peers, or 3. margins compress below 30%. Adani Green Energy has a more proven track record of scaling (10.5 GW vs 8.8 GW for NGEL) and higher margins, suggesting better operational efficiency. Reliance Industries is entering the renewable space with an aggressive 100+ GW target by FY32, which could commoditize tariffs further and pressure NGEL's pricing power. JSW Energy's lower valuation multiple (20-22x) suggests the market is discounting smaller players without government backing. NGEL's premium valuation is justified only if it can execute better than peers and maintain margin leadership—a tall order given competitive intensity.

1. NTPC Green Energy is a well-positioned player in India's renewable energy transition, backed by a strong parent company and government support. The recent commissioning of 410 MW demonstrates execution capability. However, the investment case is contingent on several fragile assumptions: stable tariffs at Rs 2.0+/kWh, capacity factors of 22%+, timely execution of 60 GW by FY32, and sustained government support for renewable energy. The current valuation (30-35x EV/EBITDA) prices in near-perfect execution with margin stability, leaving little room for error. The base case scenario (50% probability) implies 12-15% CAGR returns, which is below long-term equity market expectations. The bear case (25% probability) implies 0-5% returns if execution slows, tariffs fall, or capex overruns occur. Long-term investors should ask:
2. Can NGEL really scale 7x to 60 GW while maintaining 15%+ ROCE in a commoditizing market?
3. What is the downside if tariffs fall to Rs 1.8/kWh or capacity factors are 20%?
4. Is the green hydrogen bet a distraction or a future growth driver? The stock is suitable for patient investors with conviction in India's energy transition and comfort with government-backed businesses, but unsuitable for those seeking high returns or margin expansion. Monitor quarterly capacity additions, tariff trends, and debt levels closely—these are the key variables that will determine whether the 60 GW thesis succeeds or fails.