NHPC - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.4

Let’s break down NHPC Ltd., a central public sector enterprise and India's leading hydropower producer, known for its steady income profile and sovereign security — though growth and valuation metrics warrant a cautious stance.

⚙️ Core Financials Evaluation

Profitability

ROCE: 7.39% and ROE: 7.67% — relatively modest, typical for mature utilities with government linkages.

EPS of ₹2.99 — low on absolute terms; earnings power limited by price-controlled tariffs.

Quarterly Performance

PAT surged to ₹854 Cr. from ₹231 Cr. — impressive Qtr Profit Var: 57.0%, indicating cyclical revenue spike (possibly seasonal hydropower contribution).

Debt & Leverage

Debt-to-equity at 1.00 — manageable but highlights capital intensity of infrastructure-heavy assets.

Dividend Payout

Yield of 2.26% — attractive for income-seekers; consistent with PSU dividend policies.

💹 Valuation Check

Indicator Value Analysis

P/E Ratio 28.1 Slightly high given growth and EPS profile

P/B Ratio ~2.13 Acceptable for PSU utility

PEG Ratio -5.22 Negative — indicates declining growth trajectory or one-off spikes skewing the metric

Intrinsic Value ✖ Likely at or below current price, driven by flat earnings growth

Conclusion: Stock valuation appears rich for a low-growth, regulated cash-flow model — market likely pricing in dividend security and infra tailwinds.

🔌 Business Model & Strategic Edge

Core focus on hydroelectric generation, with diversification into solar and wind gradually unfolding.

Backed by government guarantees, ensuring payment security and long-term PPAs.

Competitive moat includes license advantage, sovereign contracts, and infra integration.

Faces execution delays due to environmental clearances and land acquisition challenges.

📉 Technical Pulse

RSI: 40.8 — edging toward oversold; may offer rebound opportunity.

MACD: -0.40 — mild bearish momentum; consolidation likely.

Price at par with 200-DMA (₹84.5); below 50-DMA (₹85.8) — technical neutral with weak upside.

FII & DII holdings nearly static — institutions aren’t aggressive.

🎯 Entry Zone & Holding Strategy

Entry Zone: ₹78–₹82 — ideal for dividend-focused accumulation, just below current levels.

Long-Term Strategy

Suitable for low-risk, income-oriented portfolios, especially for investors preferring sovereign PSUs and defensive allocations.

Not a growth compounder; recommend holding as a stability anchor in power/infra exposure.

I can create a PSU power sector matrix comparing NHPC with NTPC and SJVN — highlighting yield, ROE, asset mix and market volatility. Want that stacked view?

Edit in a page