Buy NHPC Ltd For Target Rs. 111 By JM Financial Services
NHPC reported consolidated net revenue of INR 27bn (-2% YoY, -3% JMFe) due to 3% YoY less generation (low water level in reservoirs). EBITDA stood at INR 14.6bn (-3% YoY, +12% JMFe), Adj PAT at INR 10bn (-1% YoY, +0% JMFe). INR 1.4bn and INR 1.02bn of expenses on account of interest on arbritation award and other income due to write back of past provisions were one-offs during 1QFY25. All adjustment in respect of flash floods in river Teesta (Oct’23) were completed during 4QFY24. With significant hydro capacity addition expected by FY26/FY27 (800 MW Parbati-II, 2000MW Subansiri Lower, 120MW Rangit-IV, 624MW Kiru) and 1000MW+ Solar, the installed capacity with regulated return is set to grow almost 50% by FY27. We estimate Revenue/EBITDA/PAT CAGR of 27%/38%/29% over FY24-27E. With a dividend yield of 2%, and nation’s priority to enhance hydropower due to its load following ability for grid balancing and pumped hydro storage in place , we continue to maintain our BUY rating on the ‘only’ large utility with 100% green energy portfolio with a TP of INR 111 (SOTP-based).
* Project commissioning: The company expects commissioning of 8X250MW Subansiri Lower by Mar’25 (3 units) and progressive completion by 1QFY27. The company is confident of commissioning 4X200MW Parbati-II in Dec’24. The 3X40MW Rangit-IV is expected to commission by 1QFY26. NHPC makes a splash .
* Operational highlights: Generation during the 1QFY25 was 7,921MU (6938MU/ 983MU NHPC/NHDC), -3% YoY on account of less water in reservoirs.
* Renewables: NHPC has 1378MW/5000MW of renewable projects under construction as owner/ intermediary out of ownership portfolio it expects to commission 488MW/890 during FY25/FY26. Hydropower - Recalling the forgotten giant of clean electricity . In addition to these, the company has 1500MW/ 7800MW of RE projects under pipeline or tendering as owner/ intermediary.
* Pumped hydro storage: The company has signed MoUs for 16,790MW of PSP with various state governments. PFRs for 640MW Indrasagar Omkareswar, 800MW Tekwa-2, 1500MW Satpura-2, 600MW Kengadi, 1800MW Savitri pumped hydro storage project (PSP) are under various stages of approval with CEA/States. The company expects to begin construction of 640MW Indrasagar Omkareswar in early FY26, becoming the first PSP project for company.
* Capex: The company has announced a planned Capex of around INR 117bn for FY25, excluding any potential Capex for pumped storage projects. The management during 4QFY24 ConCall guided for similar capex, INR 130-150bn annually for the next 5-6 years. Financial Summary (INR mn) Y/E March FY22A FY23A FY24A
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SEBI Registration Number is INM000010361
