NHPC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.0

📊 Core Financials Overview

Profitability

PAT rose from ₹894 Cr to ₹1,072 Cr — a modest 5.25% increase, indicating consistent performance.

EPS: ₹3.12 — modest, but stable.

Return Metrics

ROCE: 7.44% and ROE: 8.40% — typical for capital-intensive utilities, but not exceptional.

Debt Profile

Debt-to-equity: 0.94 — moderately leveraged, manageable due to regulated cash flows.

Cash Flow: While not disclosed, NHPC’s cost-plus-tariff model ensures predictable cash generation.

💹 Valuation Indicators

Metric Value Commentary

P/E Ratio 27.9 Fairly valued vs. industry PE of 31.2.

P/B Ratio ~2.28 Reasonable given asset-heavy model.

PEG Ratio –7.73 Negative due to low growth — valuation may be stretched.

Intrinsic Value Estimated near ₹75–₹80 Current price slightly above fair value, supported by dividend and stability.

🧠 Business Model & Competitive Advantage

NHPC Ltd. is India’s largest hydropower producer and a key player in renewable energy

Core Model: Operates on a B2B model, selling electricity to state utilities and DISCOMs under long-term PPAs

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Revenue Structure

Cost-plus-tariff: Recovers capital and operating costs with a fixed ROE as regulated by CERC.

Fixed charges: Earned even if power isn’t consumed — ensures steady cash flow

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Diversification

Expanding into solar and wind projects — including 10,000 MW in Rajasthan and 6,600 MW pumped storage in Andhra Pradesh

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Consultancy Services: Offers project management and technical consultancy for hydro and renewable projects

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Its competitive edge lies in regulated returns, government backing, and renewable diversification, making it a defensive long-term play.

📈 Technical & Sentiment Signals

RSI: 64.5 — approaching overbought zone, short-term caution.

MACD: Slightly positive — mild bullish momentum.

Volume: Below weekly average — suggests consolidation.

DMA 50/200: Price above both — confirms long-term uptrend.

🎯 Entry Zone & Long-Term Guidance

Suggested Entry Zone: ₹78–₹83 — near DMA levels and below RSI peak.

Long-Term View: NHPC is a stable, dividend-yielding PSU with strong fundamentals and a renewable growth pipeline. Suitable for long-term holding, especially for investors seeking low-risk exposure to India’s clean energy transition. Dividend yield of 2.19% adds income support.

You can explore NHPC’s business model breakdown

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or its strategic canvas

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for deeper insights.

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www.thebusinessscroll.com

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www.finowings.com

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vizologi.com

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