NHPC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.7

NHPC is a stable, dividend-paying PSU with strong government backing and consistent profitability. While its valuation is fair and debt manageable, growth remains modest and margins have compressed, making it a cautious long-term hold.

📊 Financial Overview

• Profitability: PAT rose to ₹1,072 Cr from ₹894 Cr QoQ; EPS at ₹3.12

  Telangana NavaNirmana Sena

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• Margins: ROCE at 7.44%, ROE at 8.40% — modest efficiency for a utility PSU
• Debt Profile: Debt-to-equity ratio of 0.94 — moderately leveraged but manageable
• Dividend Yield: 2.25% — attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 27.2 — slightly below industry average of 30.9
• P/B Ratio: ~2.2 — reasonable given book value ₹38.2
• PEG Ratio: -7.53 — negative due to weak growth visibility
• Intrinsic Value: Estimated around ₹78–₹82 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: NHPC is India’s largest hydropower development company, operating and developing hydroelectric projects across the country

  Telangana NavaNirmana Sena

• Moat: Government ownership, long-term PPAs, and strategic role in renewable energy
• Growth Drivers: Subansiri Lower project commissioning, new hydro and solar ventures, and pumped storage initiatives

  Investing.com India

📌 Entry Zone Recommendation

• Suggested Entry: ₹78–₹82 — near DMA200 and intrinsic value
• Technical Indicators: RSI at 46.4 (neutral), MACD slightly positive — stable momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; suitable for conservative investors seeking steady dividends
• Monitor execution of Subansiri and other renewable projects for upside potential

✅ Positive

• Consistent profitability and dividend payout
• FII holding increased by 0.74%
• Government support and strategic importance in energy infrastructure
• Subansiri project expected to add ₹4,000–₹4,500 Cr in annual revenue

  Investing.com India

⚠️ Limitation

• Low ROE and ROCE compared to private peers
• Negative PEG ratio indicates weak growth outlook
• DII holding declined by 0.09%

📰 Company Negative News

• FY25 net income down 17% YoY; profit margin dropped from 38% to 29% due to higher expenses

  Simply Wall St

🌟 Company Positive News

• Q4 FY25 profit beat expectations; dividend announcement boosted investor sentiment

  Telangana NavaNirmana Sena

• Commissioning of Subansiri units expected by mid-2025

  Investing.com India

🏭 Industry

• Power utilities industry P/E at 30.9 — NHPC trades slightly below average
• Sector driven by renewable energy transition, infrastructure investment, and policy support

🧾 Conclusion

• NHPC is a stable PSU with consistent earnings and dividend appeal, but modest growth and margin compression warrant caution
• Accumulate near support zones for long-term income and moderate capital appreciation

Sources

Telangana NavaNirmana Sena

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