When a PSU prints ₹2,700 Cr profit, pays dividends, and still trades like it just lit a beedi.

🔋 At a Glance

NLC India is a fossil fuel giant with Navratna status and cash flows that would make even Adani blush. Yet the market treats it like a coal-stained relic. With ₹15,283 Cr revenue and ₹2,714 Cr net profit in FY25, you’d think the stock would fly. Instead? It’s chilling at ₹223 with a P/E of 11.8. Welcome to PSU investing — where respect is optional.

🏭 1. What Does NLC India Do (Besides Getting Ignored)?

NLC = Neyveli Lignite Corporation.
Government owned. Navratna badge. Debt-funded growth addiction.

Core Biz:

• 🔥 Mining (Lignite) – They dig brown coal.
• ⚡ Thermal Power Generation – They burn it.
• 🌞 Renewables – They tried solar to get ESG points.
• 🧾 JV With Rajasthan Vidyut (2025) – 74:26 split to add more mines & plants.

This is not a sexy business. But oh boy, does it make boring amounts of money.

💸 2. The PSU Profit Machine That Nobody’s Cheering For

🧠 EPS doubled in 2 years.
💵 Cash from ops: ₹8,977 Cr in FY25 (yes, EIGHT THOUSAND)
📈 Stock: -4% in 1 year 🤡

🧨 3. “Other Income” = PSU Ka Jugadu Hero

FY25 Other Income: ₹1,673 Cr
Which means:

60%+ of their reported profit came from things other than operations — think interest income, subsidies, random settlement money, or god knows what.

This isn’t fraud — it’s PSU Standard Operating Procedure.

🏗️ 4. What’s Changed in 5 Years?

• 🧯 Debt: ₹27,000 Cr in FY20 → Still ₹22,429 Cr in FY25
• 🏗️ Capex: CWIP ₹15,297 Cr = Massive pipeline
• 🧠 Working Capital: 89.5 days → just 21.4 days now
• 🏦 Dividend: Regular, but payout ratio shrinking as profits rise
• 📉 Promoter Holding: 79.2% → 72.2% (Govt ne bech diya 7%)
• 🔋 JV with RVUNL: More capacity, more cashflows — and more depreciation

🧾 5. So What’s the Problem?

Let’s air the dirty laundry:

• 🧱 Low RoCE (10.8%): Capital-heavy business, returns take years
• 🤹 Other Income-heavy EPS: Not sustainable every year
• 📉 Promoter stake dilution: Disinvestment fears = sentiment drag
• 📊 One-off Volatility: Quarterly results go from -₹396 Cr to +₹982 Cr in 2 quarters 😵
• ⚠️ Contingent Liabilities: ₹13,859 Cr – That’s 45% of market cap 😳
• 🪙 Capitalizing Interest Cost? Screener says it might be happening. PSU chicanery level: High

🧮 6. Valuation: So Cheap It Feels Illegal

• 📊 EPS FY25: ₹18.90
• 📉 Current PE: 11.8
• 📈 NTPC PE: 13.8
• 📉 JSW Energy PE: 44.7
• 🏦 Book Value: ₹135
• 🔥 Dividend Yield: 1.35%

🎯 EduInvesting Fair Value Range:

Assume FY26 EPS = ₹16 (moderate drop due to Other Income normalization)
PE range = 13 to 16 (deserved for consistent profit + capex pipeline)

🧮 Fair Value = ₹208 – ₹256

Current price ₹223 → Within range, but undervaluation case exists if future profits remain stable even without one-offs.

📦 7. Shareholding Choreography

FII-DII interest rising. Retail chhod ke chala gaya. Perfect contrarian setup?

📉 8. The Silent Cash Monster

• 💵 FY25 Operating Cash Flow: ₹8,977 Cr
• 🏗️ FY25 Capex: -₹7,160 Cr
• 🔁 Financing outflow: -₹2,196 Cr
• 📊 Net Cash Flow: -₹379 Cr (because PSU = no actual “free” cash)

But fundamentally, the business is throwing ₹2,500 Cr+ FCF year after year. And that’s not a joke.

🧠 EduInvesting Verdict

NLC India is boring. PSU. Coal. Government delays. Yet… insanely cash rich.
It’s like that quiet uncle who doesn’t talk much but owns 4 plots in Noida.

• 📉 Undervalued vs peers
• 📈 Rising profits, falling working capital cycle
• 🔁 Massive capex = future triggers
• ⚠️ PSU discount still valid — this isn’t a tech stock

If you want “AI + SaaS + Metaverse” this isn’t it.
If you want “electricity + lignite + cash + zero hype”, welcome aboard.

🏷️ Tags:

nlc india, PSU stocks india, undervalued power stocks, lignite mining, government navratna companies, nlc share price, eduinvesting stock analysis, nlc cash flow, fcf rich stocks

✍️ Written by Prashant | 📅 20 June 2025