📌 At a Glance

NHPC is India’s government-run hydropower behemoth with 7,200+ MW in capacity, 53% operating margins, and a loyal dividend payout of over 50%. On paper, it’s a stable, low-risk, power-generating cash cow. But with promoter stake falling, profit growth stalling, and debt rising — is the dam about to crack?

1️⃣ Business Model – Water Power, But Make It Bureaucratic

NHPC (National Hydroelectric Power Corporation) is a Mini Ratna Category-I PSU, which basically means it’s important enough to matter but not important enough to be left alone.

Its three segments are:

• Hydropower Generation (core revenue driver):
  ~7,000 MW across 28 plants in 15 states — accounts for 15% of India’s total hydro capacity.
• Solar & Wind:
  The company is trying to go green-er with ~260 MW solar projects, like the Bikaner one partially commissioned.
• Consultancy & Trading:
  Marginal revenue. Basically “Side Hustle by NHPC”.

💡 NHPC sells bulk power to DISCOMs. Which means it gets paid… eventually. Or not. Debtor days? 169. PSU privilege.

2️⃣ Financials – Stable, But Growing Slower Than a Glacier

📉 5-Year Sales CAGR: 1%
📉 5-Year Profit CAGR: -2%
📉 3-Year Stock Price CAGR: 40% ← This doesn’t match fundamentals.

💸 They make money. They pay dividends. But growth is a myth and capex keeps ballooning.

3️⃣ Capex Party – But Who’s Invited?

• Work in Progress Assets (CWIP): ₹50,400 Cr (up from ₹31,000 Cr two years ago)
• Borrowings: ₹39,500 Cr (climbed 50% in 3 years)
• Net Cash Flow (FY25): –₹620 Cr

NHPC is spending heavily, hoping plants go live and returns follow. But with solar/RE getting cheaper, hydropower is becoming the last resort, not the first.

4️⃣ Valuation – PSU Premium or Retail FOMO?

• Price: ₹82
• P/E: 27.5
• P/B: ~2x
• Dividend Yield: 2.3%

“Looks decent” — until you realize that this valuation used to belong to fast-growing FMCG companies.
NHPC is not growing, it’s… floating.

🧮 Fair Value Range (EduEstimate): ₹60–70
Based on ₹3,000–₹3,500 Cr sustainable PAT and a 15–18x multiple. 27x for this kind of growth? Kuch zyada ho gaya.

5️⃣ Stock Performance – Retail Holding = Moon 🚀?

• Stock CAGR (3Y): +40%
• 1-Year Return: -18%
• Public Shareholding (Mar 2025): 12.05% (up from 6% in 2022)

Promoters cut stake by 3.5% over 3 years.
Retail investors doubled.
Retail loves PSU dividends, but the smart money might be silently walking out.

6️⃣ Risks – Not Just Hydropower, Also Hydropain

• ⚡ Monsoon Dependence: Bad rains = low generation = bad quarter
• 🧾 Delayed Payments from DISCOMs: 169 days receivables = good luck collecting
• 📉 Debt-Heavy Capex: They’re spending big, but returns are far out.
• 🤝 ESG Issues: New dam projects face heavy environmental resistance
• 🔋 Solar Threat: Hydropower isn’t as cheap or as fast to deploy as solar anymore

7️⃣ Final Thoughts – NHPC: Boring But Bribing With Dividends

NHPC is not a bad company. It’s a stable PSU that delivers 50%+ EBITDA margins, pays steady dividends, and runs important power assets.

But is it worth 27x earnings and ₹83/share, especially when profits are going backward?

If you want a slow compounding, dividend-paying, capital-heavy business with zero urgency — NHPC is your type.

If you’re looking for a PSU that can actually grow, this may not be it.

✍️ Written by Prashant | 📅 20 June 2025

✅ Tags

NHPC India, PSU power stocks, hydropower stocks, NHPC analysis, NHPC share price, NHPC stock review, FY25 power results, NHPC vs NTPC, PSU dividend stocks, slow growth PSU, NHPC debt, renewable power India, electricity generation India, NHPC fundamentals, NHPC solar projects, CWIP-heavy companies, long-term dividend stocks India, Indian power PSUs, government electricity companies

Thumbnail prompt or next company?