Yes, it is the UTC time of the local PC clock.
Internally, it converts the result to local time, yes. But the NTP protocol itself (RFC 5905) reports time in UTC.
Technically, the DAYTIME protocol (RFC 867) does not define any particular string format or locale for the output, so it could be anything the server wants, in any format, any timezone, etc.
The TIME protocol (RFC 868) is expressed in UTC. Indy's TIdTime and TIdTimeUDP implement this protocol. They both convert the result to local time when queried as a TDateTime, same as TIdSNTP does, however you can also get the original UTC response in UInt32 format instead via the DateTimeCard property.
Per https://tf.nist.gov/tf-cgi/servers.cgi, NIST suggests that all clients of NIST servers update to using the NTP protocol, which is what TIdSNTP implements, which you have already ruled out as a solution. TIdSNTP does not expose access to the UTC response.