In partnership with

Good morning. In today’s edition —  India’s thermal power giant NTPC’s journey towards renewable energy won’t be an easy one; air passengers are increasing, but airlines aren’t making money; and the newest quick commerce experiment.

DIVERGENT VIEW

Thermal Power Behemoth To Green Energy Champion? NTPC Faces Uphill Task

The foray of NTPC Green Energy into the listed world of the Bombay Stock Exchange and National Stock Exchange last week has been off to a great start. A wholly-owned subsidiary of India’s largest power generation firm NTPC Ltd, NTPC Green Energy is an umbrella organisation for green energy initiatives. 

While it is performing well in the markets, it has a lot of work cut out for itself. For starters, its parent company is a fossil fuel based thermal power generating behemoth contributing to 25% of India’s total power generation capacity. 

In just a little over two years since its inception in 2022, the renewable energy firm has created an operational capacity of 3,171 MW, including 3,071 MW from solar power and 100 MW from wind energy across six states. But for NTPC group, which has an installed power capacity of 76,530 MW, the renewable energy capacity so far is negligible.

The imperative of the NTPC group to transform itself into a green energy major could have major implications for the parent company. Will it be able to live up to the task?

PODCAST

The Markets Rise For Third Session

On Episode 449 of The Core Report, financial journalist Govindraj Ethiraj talks to Sanjeev Jain, Chief Operating Officer at Wipro as well as Ajay Sharma, Managing Director (Valuations) at Colliers International.

• The markets rise for third session, stabilising upwards now.

• The rupee falls again as RBI seemingly lets go.

• Is the premium end of the real estate market bottoming out?

• How Wipro is training its top brass in AI and using it for more organisational efficiencies.

• Air cargo volumes are up last month, stay high as trade signals but Trump trade tariffs could hurt.

• AT&T stock is being fancied, for its boring fibre business.

CO:RELATION

Healthcare Metrics Strong 

Hospital companies are in a goldilocks phase. Consistent growth in bed demand has ensured that capacity expansion does not lead to a supply glut. According to India Ratings, an affiliate of the global rating agency FITCH, cashflows are healthy and likely to continue for major listed hospital companies. The average cash flow from operations is 1.5 times more than the capex for the past five years. That shows a historically lower reliance on external debt for funding capex requirements (including mergers and acquisitions). 

Significant company shares like Apollo Hospitals, Fortis Healthcare, and Aster DM witnessed strong performance in 2024. The rating agency believes the demand-supply scenario will remain favourable towards hospital companies with increasing patient access and affordability. Health insurance coverage is increasing rapidly, and patients are willing to undergo elective surgeries. Investors are backing businesses with solid balance sheets and generating steady cash flows from operations. When share prices are trading at multi-year high price-earnings multiples, investors choose companies that use capital efficiently..

MESSAGE FROM OUR PARTNER

This isn’t traditional business news

Welcome to Morning Brew—the free newsletter designed to keep you in the know on the business news impacting your career, company, and life—in a way you didn’t know you needed.

Note: this isn’t traditional business news. Morning Brew’s approach cuts through the noise and bore of classic business media, opting for short writeups, witty jokes, and above all—presenting the facts.

Save time, actually enjoy business news, and join over 4 million professionals reading daily.

Check it out

CORE NUMBER

61,469

This is the number of Micro, Small and Medium Enterprises (MSMEs) registered under the government's Udyam Registration portal, that have been closed as of November 15, 2024, since the portal's launch on July 1, 2020. According to data shared in the Lok Sabha, 60,909 micro units, 507 small units, and 53 medium-sized units have shut their operations to date. Maharashtra leads in closures with 15,220 units shut, followed by Tamil Nadu (7,894 units), Gujarat (5,972 units), Rajasthan (4,994 units), and Uttar Pradesh (3,769 units). The Core had reported earlier on how delayed payments are a major factor affecting the working capital of MSMEs, often leading to business closures due to losses.

FROM THE PERIPHERY

—✈️ India's aviation sector is grappling with a puzzling paradox: record passenger growth alongside continued financial challenges. According to credit rating agency ICRA, domestic air traffic in the country is projected to reach 164-170 million passengers in FY2025, a 7-10% increase. However, ICRA also forecasts a net loss of Rs. 20-30 billion for the industry in FY2025 and FY2026. Despite the surge in traffic, airlines face high operating costs, low ticket prices, and supply chain issues, hindering profitability. The grounding of approximately 144 aircraft, representing 16-18% of the total fleet, due to engine failures and supply chain problems further aggravates the situation. Interestingly, these projections differ from those made in March 2023, which estimated a higher growth rate of 8-13% for FY2024 and FY2025. 

—🏗️ Construction costs in India have surged, with general manufacturing up 3.4%-6.7% and modern, high-tech Grade-A warehouses rising 4.8%-6.7% from H1 2020 to H1 2024, according to Savills India, a global real estate advisory firm. Kolkata led the spike in general manufacturing costs (6.7%), while Chennai topped warehousing increases (6.7%), The Economic Times reported. Growth is powered by demand from FMCG, electronics, EVs, and supportive government policies, with industrial supply expected to surpass 60 million square feet annually. Rising crude oil, steel, cement, and labour costs are key drivers, yet India remains cost-efficient compared to developed nations due to affordable labour and materials.

—🌽 Above normal winter temperatures in India could harm winter crops such as wheat, chickpeas and rapeseed. The India Meteorological Department said that except for peninsular India, other parts will see above normal maximum temperatures. “The occurrence of cold waves over northwest, central, east and northeastern parts of the country during December 2024 is likely to be below normal,” the weather forecast for the season read. The number of coldwave days are also going to be below normal. This isn’t great news for India’s winter crops that need the cold weather to thrive. This comes at a time when the prices of wheat, a winter crop, have hit record highs because of high demand and a supply shortage. This could be further exacerbated by a warmer winter. 

—💊 E-commerce giant Flipkart is venturing into the rapid medicine delivery market, aiming to deliver orders within 10 minutes. The company plans to partner with local pharmacies in metro areas, leveraging its existing delivery network to ensure swift deliveries. This move aligns with Indian regulations that prevent foreign-backed e-commerce firms from owning inventory and restrict pharmacy operations to registered chemists with the necessary licenses. While Flipkart's initiative promises convenience, it also raises concerns about the feasibility and sustainability of such rapid delivery models, particularly in the context of prescription medications. Similar offerings, such as Dunzo's medicine delivery service, have faced challenges and scaled-down operations after burning through significant VC funding..

SUPPORT THE CORE

Dear Readers,

Some of you have written to us expressing your intent to contribute to The Core’s journalism. While we currently do not have a subscription or membership plan, you can still support us by clicking the link below.

Another way to support The Core is by sharing this newsletter with like-minded people in your communities, colleagues, friend and family.

Was this email forwarded to you? Subscribe