NHPC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.6

📊 Financials: NHPC has moderate fundamentals with ROE at 8.4% and ROCE at 7.44%, reflecting average efficiency. Debt-to-equity stands at 0.99, indicating relatively high leverage compared to peers. EPS is ₹3.15, supported by a healthy dividend yield of 2.53%. Quarterly PAT declined from ₹1,072 Cr. to ₹926 Cr., though year-on-year variation shows a modest +3.06% growth.

💹 Valuation: Current P/E of 24.3 is slightly below industry average of 26.7, suggesting fair valuation. Book value of ₹39.6 gives a P/B ratio of ~1.93, which is on the higher side. PEG ratio is negative (-6.74), indicating weak growth prospects relative to valuation. Intrinsic value appears close to current price, offering limited margin of safety.

⚡ Business Model: NHPC operates in hydroelectric power generation, benefiting from renewable energy demand and government support. Its competitive advantage lies in long-term projects, regulated tariffs, and strategic importance in India’s energy mix.

📈 Entry Zone: Current price ₹76.6 is near support at ₹71. Entry zone recommended between ₹72–76 for accumulation. Long-term holding is suitable for dividend-focused investors, though growth prospects remain modest.

Positive

• 📌 Dividend yield of 2.53% provides steady income
• 📌 Stable government-backed hydroelectric business model
• 📌 Increase in FII holding (+0.74%) shows foreign investor confidence
• 📌 52-week index gain of 26% reflects sectoral strength

Limitation

• ⚠️ Low ROCE (7.44%) and ROE (8.4%) indicate limited efficiency
• ⚠️ High debt-to-equity ratio (0.99) raises leverage concerns
• ⚠️ Negative PEG ratio (-6.74) signals weak growth prospects
• ⚠️ Current price below DMA 50 (79.9 ₹) and DMA 200 (82.8 ₹), showing bearish trend

Company Negative News

• 📉 Quarterly PAT declined from ₹1,072 Cr. to ₹926 Cr.
• 📉 Decline in DII holding (-0.09%) reflects reduced domestic institutional interest

Company Positive News

• 📈 FII holding increased (+0.74%), indicating foreign investor confidence
• 📈 Consistent dividend payout supports long-term shareholder value

Industry

• ⚡ Renewable energy sector supported by government initiatives and climate goals
• ⚡ Industry P/E at 26.7 suggests NHPC trades slightly below peers

Conclusion

✅ NHPC offers stability through its government-backed hydroelectric projects and attractive dividend yield. Entry around ₹72–76 is reasonable for income-focused investors. Long-term holding is suitable for defensive portfolios, though limited growth and high leverage warrant cautious allocation.

Would you like me to extend this into a peer benchmarking overlay comparing NHPC with other renewable energy companies, or a basket scan for dividend-yielding utilities to support compounding strategies?