NHPC - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.4
| Stock Code | NHPC | Market Cap | 83,575 Cr. | Current Price | 83.2 ₹ | High / Low | 92.3 ₹ |
| Stock P/E | 26.2 | Book Value | 39.6 ₹ | Dividend Yield | 2.30 % | ROCE | 7.44 % |
| ROE | 8.40 % | Face Value | 10.0 ₹ | DMA 50 | 78.8 ₹ | DMA 200 | 80.0 ₹ |
| Chg in FII Hold | -0.05 % | Chg in DII Hold | 0.47 % | PAT Qtr | 293 Cr. | PAT Prev Qtr | 926 Cr. |
| RSI | 60.9 | MACD | 2.00 | Volume | 1,58,66,856 | Avg Vol 1Wk | 2,34,07,647 |
| Low price | 68.7 ₹ | High price | 92.3 ₹ | PEG Ratio | -4.08 | Debt to equity | 0.99 |
| 52w Index | 61.4 % | Qtr Profit Var | 7.04 % | EPS | 3.17 ₹ | Industry PE | 31.0 |
📊 Financials: NHPC shows modest efficiency with ROE at 8.40% and ROCE at 7.44%. EPS is low at ₹3.17, and quarterly PAT dropped sharply (₹293 Cr vs ₹926 Cr), reflecting earnings volatility. Debt-to-equity stands at 0.99, indicating relatively high leverage compared to peers. Dividend yield of 2.30% provides some stability for long-term investors.
💹 Valuation: The stock trades at a P/E of 26.2, below the industry average of 31.0, suggesting fair valuation. However, PEG ratio of -4.08 highlights weak growth prospects relative to valuation. Book value of ₹39.6 provides a reasonable intrinsic base. Overall, valuation is fair but growth concerns weigh on attractiveness.
🏭 Business Model: NHPC operates in the power generation sector, primarily hydroelectric projects. Its competitive advantage lies in government backing and stable cash flows from regulated tariffs. However, earnings are vulnerable to seasonal water availability, project delays, and high debt levels.
📈 Entry Zone: Attractive entry would be near ₹78–₹80, aligning with support levels and fairer valuation. Current price (₹83.2) is above both 50 DMA (₹78.8) and 200 DMA (₹80.0), suggesting short-term strength. Long-term investors may accumulate cautiously, focusing on dividend yield and stability rather than growth.
Positive
- Dividend yield of 2.30% provides steady income.
- Government-backed operations ensure stability.
- Fair valuation with P/E below industry average.
- DII holdings increased (+0.47%), showing domestic institutional support.
Limitation
- Weak ROE (8.40%) and ROCE (7.44%).
- High debt-to-equity ratio (0.99).
- Quarterly PAT dropped sharply (₹293 Cr vs ₹926 Cr).
- FII holdings declined (-0.05%), showing reduced foreign confidence.
Company Negative News
- Sharp decline in quarterly profits.
- High leverage compared to peers.
- Weak growth outlook reflected in negative PEG ratio.
Company Positive News
- DII inflows (+0.47%) support domestic confidence.
- Dividend yield of 2.30% adds stability.
- Government backing ensures long-term operational resilience.
Industry
- Power generation sector remains regulated and capital-intensive.
- Industry P/E at 31.0 highlights NHPC’s fair valuation.
- Seasonal and project risks affect earnings consistency.
Conclusion
⚖️ NHPC demonstrates fair valuation and stable dividend yield but suffers from weak efficiency, high debt, and earnings volatility. Entry is favorable near ₹78–₹80 for cautious long-term investors. Holding is viable for dividend stability, but growth prospects remain limited, requiring careful monitoring of debt and profit trends.