🧵 At a Glance
NHPC, India’s hydropower heavyweight, generates ~15% of the nation’s hydroelectricity and pays a steady dividend. But with stagnant profit growth, high debtor days, and a rich P/E of 28x, is this a calm reservoir… or a dam about to break?
🌊 1. The Hydro Giant Nobody Talks About
NHPC = National Hydro Power Corporation
Which = 7,233 MW of installed capacity
Which = 6,971 MW of hydro
Which = More hydropower than you, your neighbour, and their dog combined.
The company operates across 15 states and 2 Union Territories. It’s India’s quiet power uncle – shows up every year, gives you some electricity and dividend, then disappears.
📉 2. The Sales Graph That Forgot to Grow
Here’s NHPC’s financial gym routine:
- 5-year Sales CAGR: 1%
- 5-year PAT CAGR: -2%
- 3-year PAT CAGR: -5%
- Latest FY25 PAT: ₹3,412 Cr (down from ₹4,261 Cr in FY23)
Even the Himalayan glaciers are melting faster than NHPC’s revenue growth.
And yet… the stock is up 32% over 5 years. The PSU bull market is carrying hydroboats too.
⚡ 3. Operating Margins Are 💪
Let’s be honest – hydro is a cash cow once set up.
| Metric | FY25 |
|---|---|
| Operating Profit Margin | 53% |
| ROE | 7.67% |
| ROCE | 7.39% |
| Debtor Days | 169 |
But those debtor days? That’s nearly 6 months! Clearly, NHPC is generous when it comes to letting DISCOMs take their sweet time.
🪙 4. Dividends: The Real Reason People Buy
- NHPC’s dividend payout is among the highest in PSU universe: ~65% in FY25
- Dividend yield ~2.24% at CMP ₹85
- 10-year dividend consistency ✅
Even when earnings don’t grow, the company makes sure your mailbox doesn’t feel ignored.
🧮 5. Fair Value Time ⏰
Let’s do the EduInvesting math:
- FY25 EPS = ₹2.99
- Let’s assume fair P/E range:
- Base Case: 18x (mid-cap PSU, slow growth, high yield)
- Optimistic Case: 22x (green energy narrative + PSU FOMO)
🎯 Fair Value Range = ₹54 to ₹66
At CMP ₹85, the stock is trading at 28x. That’s “Adani Green” territory for “NTPC minus growth”.
So either NHPC is becoming a green energy darling… or this is a full-blown PSU bubble.
💸 6. Capex & Borrowings: Building the Future?
- NHPC is not sitting idle. It’s adding solar capacity too.
- Part of the 300 MW Rajasthan solar project (160 MW already operational)
- CWIP in FY25: ₹50,398 Cr (almost half its total assets)
- Debt levels rising: Borrowings at ₹39,557 Cr in FY25 (up 35% YoY)
Translation: Future power may come. Current returns? Meh.
🧠 7. Peer Comparison – Who’s the Best PSU Power Babu?
| Company | CMP | P/E | ROE | Dividend Yield |
|---|---|---|---|---|
| NTPC | ₹331 | 13.7 | 16% | 2.3% |
| NHPC | ₹85 | 28.4 | 7.7% | 2.2% |
| JSW Energy | ₹508 | 49.8 | 6.5% | 0.4% |
| NLC India | ₹228 | 12.1 | 11% | 1.3% |
| SJVN | ₹101 | 48.4 | 4.9% | 1.8% |
- NHPC trades at the second-highest P/E among PSU power players.
- Yet it delivers average returns on equity and zero growth.
- NTPC is literally doing 2x the return at half the valuation. Let that sink in.
🧩 TL;DR: What’s Really Going On?
🟢 Pros:
- Strong dividend payout history
- Monopoly-like position in hydro power
- High OPM due to low operating cost model
- Capex in place for solar transition
🔴 Cons:
- Zero to negative profit growth over 5 years
- High valuation for a PSU with 7% RoE
- Rising debt, increasing CWIP
- Payout not sustainable if profits fall further
🎯 EduInvesting Verdict
If you bought NHPC for ₹30–₹40, you’re chilling.
If you’re buying now at ₹85… you might be sipping from a pricey dam with limited flow.
The stock is being priced like a renewables rocket, but it’s still mostly hydro + government filework.
🧠 Tags:
NHPC stock analysis, NHPC fair value, PSU power stock, hydropower India, NHPC dividend yield, undervalued PSU, renewable energy India, NHPC vs NTPC, EduInvesting power stocks
✍️ Written by Prashant | 📅 26 June 2025
