At a Glance

NLC India, a Navratna PSU under the Ministry of Coal, is India’s lignite-to-electricity specialist. With ₹31,000+ Cr market cap, generous dividends, and massive renewable ambitions, it’s trying to go from being a thermal relic to a green giant — while still raking in ₹1,673 Cr in “other income” like a true babu stock.

⚡ 1. TL;DR – Coal, Capital, and Contingent Liabilities

• 🧯 Core Biz: Lignite mining + power generation
• ⚡ Renewables: 1,370 MW solar + 51 MW wind
• 💥 Stock Price: ₹84 (June 2020) → ₹229 (June 2025) — 2.7x in 5Y
• 💸 Dividend Yield: 1.3% | Payout: 16% (down from 30%+)
• 🧾 FY25 PAT: ₹2,714 Cr (up 45% YoY)
• 📈 RoE: 14.9% | RoCE: 10.8%
• 🏗️ Capex-heavy: ₹15,000+ Cr in CWIP
• ⚠️ ₹13,859 Cr in contingent liabilities
• 🧠 KMPs: CMD Prasanna Kumar Motupalli, CFO Pradeep Kumar
• 🧨 Other income = 62% of PAT in FY25

🏭 2. Business Model – Dig Coal, Burn It, Sell Power (Repeat)

• NLC = Neyveli Lignite Corporation. The OG lignite miner.
• Fully government-owned until IPO in 2016; now still 72.2% held by GoI.
• Two main business verticals:
  1. Mining: 30.6 MTPA of lignite capacity
  2. Power Generation:
     • Thermal (Lignite-based): 4,240 MW
     • Renewable: 1,421 MW

🔋 NLC also sets up JVs with state discoms (Rajasthan, Tamil Nadu) for co-owned generation projects.

🌱 Ambitions of adding 6+ GW in renewables by 2030. But currently, legacy dominates.

📊 3. Financials – PSU with a Power Surge (and Massive Other Income)

🔌 Other Income FY25: ₹1,673 Cr
🧨 That’s 62% of PAT. Not ideal. But classic PSU accounting.

📉 4. What’s Going Right (And Wrong)

✅ Positives

• 👷‍♂️ Big infra = big depreciation = small tax outgo
• 💸 Operating Cash Flow FY25: ₹8,977 Cr
• 💥 Profit Growth CAGR (3Y): 51%
• ⚡ Renewable pivot accelerating — JV with RVUNL for green power
• 📦 Working Capital Days down to 21 (from 89 in FY21)
• 📉 Stock still trades at a low 12.1x P/E

🚫 Negatives

• 🐌 5Y Sales CAGR: Just 8%
• 🥵 Power sales volatile (₹12,999 Cr FY24 → ₹15,283 Cr FY25)
• 💣 Contingent liabilities = ₹13,859 Cr
• 📉 Dividend payout shrinking despite rising profits
• 🏗️ CWIP = ₹15,297 Cr — indicating slow project completions
• 🧾 Promoter stake down from 79.2% to 72.2% in 3 years

🧠 5. Valuation – Green Potential, Coal Balance Sheet

Let’s build a fair value range based on conservative PSU-style multiples.

Base Case FY26E

• EPS: ₹20
• P/E Range: 10–12x (typical PSU range, especially with debt + other income)
  🔎 FV Range = ₹200–₹240

Bull Case FY27E

• EPS: ₹25
• P/E Range: 12–15x (if green energy gets re-rated)
  🎯 FV Range = ₹300–₹375

🏁 EduInvesting FV Range (12–18M): ₹200–₹375
At ₹229 – it’s not expensive. But it needs project delivery + renewable ramp to catch the upper band.

🧾 6. Ownership & Leverage – PSU Dynamics 101

• Institutions have doubled exposure 💪
• Public holding shrinking 😴
• Debt remains high (~₹22,000 Cr), but interest cost stable

🧨 7. Final Word – Underrated, Unsexy, Unleveraged?

NLC is your classic PSU puzzle:

• 📉 Underperforming vs peers like NHPC or NTPC
• ⚡ Sits on massive asset base, but slow returns
• 🪴 Green story coming, but still coal at core
• 💰 Cheap earnings but 62% of them are non-operating

🤔 If India pushes hard on domestic coal-based power while easing ESG heat, NLC could surprise. If not, it remains a low-beta dividend PSU – the kind LIC loves.

✍️ Written by Prashant | 📅 June 18, 2025

Tags: NLC India, PSU Stocks, Thermal Power, Renewable Energy India, Coal Sector, Navratna PSU, Power Generation Stocks, Dividend PSU, Ministry of Coal