NHPC Ltd (BSE: 533098, NSE: NHPC) — Business Report / Investor Feed

Business & Distribution Evaluation — NHPC Limited

1. Business Identity

NHPC Limited is India's flagship hydropower generation company, primarily engaged in the generation and sale of bulk electricity to state-owned distribution companies (DISCOMs) and private DISCOMs across India [12][19][90]. The company has diversified into solar, wind, power trading, consultancy services, and is expanding into green hydrogen, pumped storage projects (PSPs), and battery energy storage systems (BESS) [14][19][59].

Main object (from Memorandum of Association): "To Plan, promote and organise an integrated and efficient development of power in all its aspects through Conventional and Non-Conventional Sources in India and Abroad, including planning, investigation, research, design and preparation of preliminary, feasibility and definite project reports, construction, generation, operation and maintenance of power stations and projects, transmission, distribution, trading and sale of power" [43][61].

Geographic Footprint [FY25]:

Nepal Projects — Development Model: "The development model includes both domestic supply and cross-border electricity export, aligning with regional energy security goals" [86].

Management [as of Q3 FY26]: Mr. Bhupender Gupta — Chairman and Managing Director; Mr. Uttam Lal — Director (Personnel); Mr. Sanjay Kumar Singh — Director (Projects); Mr. Suprakash Adhikari — Director (Technical); Mr. Mahesh Kumar Sharma — Director (Finance) [102].

Wage distribution by location [FY25] (S):

Source: [35]

2. Revenue Architecture

Revenue Model

NHPC operates a regulated-tariff, cost-plus model for its core power generation business. "The price (tariff) to be charged by the company for electricity sold to its customers is determined by Central Electricity Regulatory Commission (CERC) under applicable CERC (terms and conditions of tariff) Regulations. The said price (tariff) is based on allowable costs like interest costs, depreciation, operation and maintenance charges plus a stipulated return. This form of rate regulation is known as cost-of-service regulations" [93]. The current tariff regulation period is April 2024 – March 2029 [5][100].

Revenue sources [36][85]:

• Sale of electricity (CERC-regulated tariff via long-term PPAs) — "Revenue is measured based on the consideration that is specified in a contract with a customer" [85]
• Finance lease income (PPAs treated as embedded finance leases — Nimmo Bazgo, Chutak, TLDP-III with single beneficiaries) [34][94]
• Operating lease income (PPAs treated as embedded operating leases — TLDP-IV, Wind Jaisalmer) [34][79]
• Power trading (buy-sell margin; entitled to ₹0.07/kWh trading margin on REIA solar projects) — "The Group purchases power from Generating Companies and sells it to DISCOMs" [87][91]
• Consultancy & project management (contract-based fees; input method revenue recognition) [91]
• Other operating income (GBI, tariff revision interest) [11][52]
• Other income (interest from banks/employees/contractors, dividend from JVs/subsidiaries, LPSC from beneficiaries, scrap sale, insurance claims) [85][96]

Revenue Mix by Activity Type (Consolidated)

Source: [11][45][87]

Sale of Power (including lease income) constitutes ~98.7% of consolidated operating revenue [FY25], confirming an essentially single-product business. The collapse of Other Operating Revenue from ₹378.48 Cr to ₹6.01 Cr masks underlying organic growth — adjusted Sale of Energy grew only 2.7% YoY, while the 13.1% increase in average selling price (₹4.76/unit vs ₹4.21/unit) compensated for lower volumes.

Revenue Disaggregation by Type & Geography (Consolidated) [FY25]

Source: [87]

Consolidated Sale of Power — Detailed Breakdown

Source: [45]

Revenue Mix by Activity Type (Standalone) (S)

Source: [24][58][94]

Multi-Year Revenue Trend (Standalone) (S)

Source: [41][58]; *FY23 from investor call [47]

Quarterly & 9-Month Revenue Updates [FY26]

Source: [96][99]

Source: [96]

Source: [68]

Q3 FY26 revenue context: "The decrease in revenue is mainly due to decrease in sales pertaining to previous years on account of Pay Anomaly and Interest on Arbitration accounted in previous corresponding quarter to the extent of Rs. 500 Crore approx." [96]. The 9M FY26 revenue increase of ~10% "is mainly due to higher generation on account of commissioning of Parbati-II Power Station" [96][99].

Other Income [9M FY26]: ₹766 Cr vs ₹1,024 Cr (9M FY25), -25%, driven by cessation of Teesta-V business interruption insurance claims (₹352 Cr in prior period vs nil in current) and lower provision write-backs [96].

Employee Cost [9M FY26]: Declined from ₹1,402 Cr to ₹1,096 Cr (-₹306 Cr), "mainly due to decrease in Employee Remuneration Pay Anomaly by Rs. 363 Crore" [96].

Key Observations

• Total consolidated revenue from operations grew ~7.8% YoY in FY25 [11][87].
• Sale of Power (including lease income) constitutes ~98.7% of consolidated operating revenue [FY25], confirming essentially a single-product business [11][37].
• Power trading revenue nearly doubled YoY (₹21.50 Cr vs ₹11.52 Cr), driven by commissioning of 320 MW solar projects under the REIA scheme [52][54].
• Other operating income collapsed from ₹378.48 Cr to ₹6.01 Cr because FY24 included one-time tariff interest from truing-up orders for 2014-19 period [52][58].
• Adjusted Sale of Energy (S) (excluding earlier year sales): ₹8,285.54 Cr [FY25] vs ₹8,065.21 Cr [FY24] — organic growth of 2.7% [52][54].
• Average selling price (S): ₹4.76/unit [FY25] vs ₹4.21/unit [FY24] — 13.1% increase [76].
• Incentives earned (S): ₹410.84 Cr [FY25] vs ₹457.81 Cr [FY24] — decline of 10.3% due to lower PAF [76].
• Revenue is overwhelmingly domestic (>99.99%). Foreign revenue of ₹0.40 crore [FY25] relates solely to consultancy in Nepal [87].

Pricing Mechanism & Pass-Through Ability

• CERC cost-plus tariff: Annual Fixed Charges (AFC) determined by CERC based on 5 components: (1) Return on Equity (RoE), (2) Depreciation, (3) Interest on Loans, (4) O&M Expenses, and (5) Interest on Working Capital. FX rate variations and taxes are recoverable [3][93].
• Complete cost pass-through: "Variation in interest rate, currency exchange rate variations and other price risk variations are recoverable from tariff and do not impact the profitability of the company" [70].
• RoE grossing-up: For FY25–FY29, RoE is grossed-up using effective tax rate of the respective financial year [76].
• Tariff periods: 5-year blocks; current period FY25–FY29 under CERC Regulations, 2024 [5][89].
• Regulatory asset framework: "A regulatory asset is recognized when it is probable that the future economic benefits associated with it will flow to the entity as a result of the actual or expected actions of the regulator" [93].
• Incentives: Comprise (a) incentives on achieving PAF > NAPAF, (b) incentive for secondary energy, and (c) Unscheduled Interchange charges [76].
• Late Payment Surcharge (LPSC): "CERC Tariff Regulations 2024-29 allow the Company to raise bills on beneficiaries for late-payment surcharge, which adequately compensates the Company for time value of money due to delay in payment" [82].
• Rebate to customers: ₹24.75 Cr [FY25] vs ₹27.41 Cr [FY24] [45][93].
• Tariff flexibility: Back-loading of tariff after increasing project life to 40 years, increasing debt-repayment period to 18 years, and introducing escalating tariff [32][78].
• RE Certificates: CERC notified RE Certificates for hydropower with a multiplier of 1.5 [78].
• ISTS charge waiver: Waiver for new HEPs; subsequently extended with part waiver in steps of 25% from July 2025 to July 2028 for HEPs awarded and PPA signed up to June 2028 [78].

Unbilled Revenue

Source: [11][24][45]

Unbilled revenue continues to accumulate in FY26. During 9M FY26, unbilled sales from AFC differentials amounted to ₹408.62 Cr, Parbati-II provisional unbilled sales ₹898.35 Cr, and Subansiri Lower Unit#2 provisional unbilled sales ₹50.36 Cr [100]. Also, Karnisar Solar 300 MW generated billed revenue of ₹47.77 Cr (9M FY26) [100]. This reflects pending CERC tariff approvals for the FY25–FY29 tariff period and newly commissioned projects.

Unbilled revenue nearly doubled from ₹1,914 Cr to ₹3,244 Cr (consolidated) in FY25 and continues accumulating in FY26 — a structural feature of the regulatory model where newly commissioned projects (Parbati-II, Subansiri Lower) generate revenue on provisional tariffs pending CERC approval. While ultimately recoverable, this creates a significant working capital drag and introduces timing uncertainty on cash flows.

3. Product & Service Portfolio

Core Offerings — Installed Capacity [FY25]

NHPC has an aggregate installed capacity of 8,193.61 MW across 23 hydroelectric projects (including 2 via NHDC), 2 solar projects, and 1 wind project [9][39][48].

Strategic direction: "NHPC will continue development of Hydro Power Projects as its core business, it would make all endeavors to expand its business in Renewable Energy development coupled with storage solutions such as Green Hydrogen and Pumped Storage Projects" [59]. Management has reiterated: "Our plan is to expand our solar power business also and for that, we are in discussion with various stakeholders... in addition to the hydro and the pump storage" [98].

Power Station-wise Generation Performance [FY25] (S)

Source: [7][50]

Generation Trend — Three-Year Decline Reversal in FY26

Source: [7][47][50][99][102]

After two consecutive years of declining generation (FY23→FY24: -11.5%; FY24→FY25: -8.7%), 9M FY26 shows a strong reversal with 15% growth — driven by the commissioning of Parbati-II (800 MW). However, PAF at 79.27% remains below FY23's 88.75%, and the Teesta-V shutdown (510 MW, ~₹450 Cr annual AFC) continues to weigh on capacity utilization with BI insurance income now fully exhausted.

Critical inflection: After two consecutive years of declining generation (FY23→FY24: -11.5%; FY24→FY25: -8.7%), 9M FY26 shows a strong reversal with 15% growth in generation, "mainly due to commissioning of our Parbati-II Power Station (800 MW) and subsequent increase in generation of Parbati-III Power Station" [102]. However, PAF at 79.27% for 9M FY26 remains "3% lower than the previous period... mainly due to shutdown at Dulhasti, Salal, Chamera-I and Chamera-III Power Stations during monsoon" [99].

Teesta-V (510 MW): Complete shutdown since October 2023 due to glacial lake outburst flood, compounded by August 2024 landslide; annual AFC ~₹450 Cr; BI insurance recovery ₹410 Cr (12-month indemnity expired Sep 2024); restoration expected December 2025 [7][67]. Insurance income from Teesta-V ceased in 9M FY26 (₹nil vs ₹352 Cr in 9M FY25) [96].

Units Sold

Source: [25][31][76][87]

Renewable Energy Portfolio [FY25] — Commissioned

Source: [16][99]; *Full 300 MW COD declared w.e.f. 16.10.2025 [4][99] — "NHPC has also fully commissioned 300 MW Karnisar Solar Project under CPSU Scheme in Bikaner and the project has become NHPC's largest operational Solar Project as of now"

Under-Construction Projects — Updated Through Q3 FY26

Source: [15][23][44][60][77][99][100]

Solar Projects — Commissioning Pipeline [CY 2026]

Management guidance: "during this calendar year alone, we will be commissioning more than 1,000 MW of solar power" [98]:

REIA Role — Updated Pipeline & PPA Status

The REIA PPA execution gap is a material risk — only ~30% of the ~20,000 MW bid out have signed PPAs. DISCOMs are increasingly reluctant to sign standalone solar PPAs, demanding solar+battery or RTC supply instead. Grid connectivity slots available only in 2029-30 further dampen near-term offtake. This structural shift may require NHPC to pivot toward bundled storage solutions to convert its REIA pipeline into contracted revenue.

PPA execution gap is significant. Only ~30% of bid-out capacity has PPAs signed. Management acknowledged: "the demand has slightly dried down in the RE sector across India... 2-3 hindrances are there for PPAs. One is the connectivity issue, because connectivity which are now available are coming in 2029-30. So, Discoms are slightly hesitant... Discoms are now planning that they will not sign the PPA for like standalone solar. And they want that solar with the battery or some other alternative like solar plus wind plus battery, because they want now 24-hour round the clock (RTC) supply" [97]. Management remains "hopeful that in next 2 to 3 months, we may sign PPA of around 2,000 to 3,000 MW" [97].

Kamala Hydro Electric Project — CCEA Approval [April 2026]

Pumped Storage Projects (PSP) — Viability Assessment [Q3 FY26]

Management has shortlisted the most viable PSPs based on DPR analysis [101]:

Target: Start construction of at least 2 projects (~2,000 MW) during CY 2026 [98][101]. Estimated generation cost ~₹4.50/unit; total cost including pumping ~₹7.00/unit [101].

New Hydro Projects — FY27 Start Target [~10,000 MW]

Management indicated 5-6 new projects to commence in FY27 [98]:

Emerging/New Business Lines

• Green Hydrogen: Three pilot projects (Leh 25 kWe, Kargil, Chamba) under advanced stages; MoU with Govt. of Bihar for 1,000 MW solar + hydrogen mobility pilot [1][21][88].
• BESS Implementing Agency: Designated by MoP on 17 October 2024; allocated 1,500 MWh under CPSU component with VGF of up to 30% or ₹27 Lakh/MWh. Bids floated for 500 MWh (Kerala) and 1,000 MWh (AP) [27][56].
• PM Surya Ghar Yojana: Allocated 5 states and 8 Central Ministries for rooftop solar, implemented through NHPC REL [27].
• Floating Solar JV: MoU with Ocean Sun, Norway [38].

Key Differentiators

• In-house design & engineering: "NHPC is the only hydro utility in India having expertise in technical gamut of engineering geophysical explorations such as Seismic Tomography, Electrical Resistivity Tomography, Seismic Refraction Tomography and Ground Penetrating Radar" [89].
• Full design division: In-house team with extensive hydro sector experience [89].
• Rock mechanics & remote sensing labs: Proprietary capabilities [89].
• Operational automation: All power stations semi or fully automated with SCADA and distributed control systems [39][48].
• Certifications: Most power stations ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certified [6].
• Navratna status: Enhances ability to pursue JVs and strategic alliances [26].
• Government policy tailwinds: Large hydro declared as renewable energy source; HPO as separate RPO entity; ISTS charge waiver; RE certificates with 1.5× multiplier [78].
• Integrated PSP economics advantage: "Considering the requirement of the storage which is mainly from two sources only, either battery energy storage or pump storage plants only... whatever we generate, I am 100% sure that we will be very easily able to sell that with beneficiaries who have a solar power in their portfolio" [101].

Capex Guidance

Annual capex of ₹13,000–15,000 Cr planned for the next 7–8 years [38]. Internal cash accrual ~₹5,000 Cr (PAT ~₹3,800 Cr + depreciation ~₹1,200 Cr), with ~₹3,200 Cr available for equity capex after dividend [38].

Estimated contracts on capital account [FY25]: ₹29,768.60 Cr (vs ₹31,362.99 Cr FY24) [64].

4. Value Chain Position

Position: NHPC is a power generator (producer) selling bulk electricity directly to state DISCOMs via the national/regional grid. "The Company is primarily involved in the generation and sale of bulk power to various Power Utilities" [90].

Water Resource → [NHPC: Generation] → Transmission Grid (PGCIL) → State DISCOMs → End Consumers

• No direct consumer interface: "NHPC Limited is a power generation company and sells its power to various DISCOM's which sell it further to end consumers" [65][72].
• Grid dispatch: Generation schedules sent to Regional Load Dispatch Centres (RLDCs) as per Indian Electricity Grid Code (IEGC) [13][49].
• Integration direction: Primarily backward-integrated in project development — conceptualization, design, engineering, construction, commissioning, and O&M in-house [5][89]. No forward integration into transmission or distribution.
• New intermediary role: As REIA and BIA, NHPC aggregates power from RE/BESS developers via back-to-back PPA/PSA/BESPA arrangements and sells to DISCOMs, earning a trading margin [27][56][87]. However, PPA execution remains a bottleneck — only ~6,000 MW out of ~20,000 MW bid out have signed PPAs [97].

Key Inputs & Outputs

Supplier Concentration & Sourcing

Source: [8][30][35][53]

100% domestic sourcing — no imported input materials [28][35].

Subsidiary & JV Structure [FY25]

Source: [77][79][81][86]

LTHPL (Teesta-VI) merged with NHPC w.e.f. 27 January 2025 [81].

Corporate Guarantees [FY25]: ₹1,049.25 Cr across BSUL (₹213.25 Cr) and JPCL (₹836 Cr), charged at 1.20% + GST [92].

5. Distribution Architecture

Channel Structure

NHPC operates a single-tier, direct B2G/B2B channel — electricity is sold wholesale to state DISCOMs and state power utilities under long-term PPAs [3][29][90].

Contract Architecture (Distribution Moat)

The distribution model is entirely governed by long-term PPAs — "Availability of long term PPAs for our Power Stations is key to survival of Organization as this gives revenue visibility for the Organization and assured rate of return which can be utilized for business expansion" [71].

PPAs Signed During FY25

For existing/recently commissioned projects [80]:

For new/under-construction projects [80]:

This PPA-signing activity signals proactive offtake diversification beyond traditional northern/eastern states to new beneficiaries — "a conscious decision has been taken to focus on this area and execute PPAs for existing, under construction and upcoming projects for complete useful life of the projects" [80].

REIA PPA/PSA Channel — Structural Challenges [Q3 FY26]

The REIA intermediary channel faces distinct distribution challenges [97]:

1. Grid connectivity lag: Available connectivity slots are 2029-30, making DISCOMs hesitant to sign PPAs for near-term capacity
2. Shifting DISCOM preferences: DISCOMs now demand solar+battery or solar+wind+battery (RTC supply) rather than standalone solar
3. Demand-supply mismatch: Adequacy planning by DISCOMs not aligning with available RE supply

However, NHPC has received "very good response" for FDRE and wind tenders — 1,200 MW Punjab mandate attracted 15 bidders [97].

Payment Security Mechanism

NHPC benefits from a multi-layered payment security architecture — a significant distribution moat [82]:

1. Letters of Credit (LC): Customers required to open LCs covering 105% of average monthly billing [82].
2. Tri-Partite Agreements (TPA): Among GoI, RBI, and individual State Governments [82].
3. Central Plan Assistance deduction: Outstanding dues deductible from Central Plan Assistance [82].
4. Power regulation: Gradual curtailment for non-payment beyond 75 days — "This Rule has brought discipline among DISCOMs and has resulted in timely realisation of dues" [82][89].
5. Late Payment Surcharge (LPSC): Compensates for time value of money on delayed payments [82].

Finance Lease Details (Standalone) (S) [FY25]

Source: [94]

Billing & Collection Performance (S)

Source: [17][20][71]

Major overdue [31 Mar 2025]: J&K Power Corporation (₹97.94 crore of the ₹139.23 crore overdue >45 days) [20][71].

Trade Receivables (Standalone) (S)

Source: [31]

Key observation: Current billed trade receivables fell sharply (₹1,712 Cr → ₹735 Cr) indicating improved collection, but unbilled contract assets nearly doubled (₹1,763 Cr → ₹3,197 Cr), reflecting pending tariff orders [31]. This pattern is expected to persist through FY26 given continued provisional revenue recognition on Parbati-II (₹898 Cr) and Subansiri (₹50 Cr) [100].

Seasonal Nature

"In view of the seasonal nature of business, the standalone financial results of the Company vary from quarter to quarter" [18][100].

6. Customer Profile

Customer Type

Customer Concentration (Standalone) (S) [FY25]

Source: [62][74]

Customer Concentration (Consolidated) [FY25]

Source: [46]

Customer concentration is declining materially — consolidated top 4 dropped from 59.74% to 50.68% (-9.06pp) and standalone top 3 from 53.40% to 42.91% (-10.49pp) in a single year. New PPAs signed with Chhattisgarh SPDCL, Damodar Valley Corporation, and WBSEDCL signal a deliberate diversification strategy that reduces single-state credit risk exposure.

Key observations:

• Concentration declining materially: Consolidated top 4: 59.74% → 50.68% (-9.06pp); standalone top 3: 53.40% → 42.91% (-10.49pp) — indicating meaningful diversification [46][74].
• PPA diversification in FY25: New PPAs signed with Chhattisgarh SPDCL, Damodar Valley Corporation, and WBSEDCL [80].
• No concentrated geographic credit risk: "As the power stations and beneficiaries of the company are spread over various states of India, geographically there is no concentration of credit risk" [82].

Contract Structure & Relationship Depth

Impairment Allowance on Trade Receivables (Standalone) (S)

Source: [57][75]

Trade receivable loss allowance increased from ₹31.15 Cr to ₹77.66 Cr (S) (+149% YoY), though overall impairment allowance decreased from ₹772.19 Cr to ₹542.41 Cr due to recoverable amounts being realized [75].

Sector-Specific Metrics (Power Generation)

Sources: [2][7][22][50][59][76][84][99][102]; *vs 9M FY25 of 22,397 MU

Competitive Distribution Comparison

Data gap: No peer distribution metrics (SJVN, NTPC Hydro, THDC) are available in the evidence reviewed. The India installed capacity context (475.21 GW total, 47.33 GW large hydro) provides market sizing but no direct competitor comparisons [22][59]. NHPC's ~17.3% share of India's large hydro capacity positions it as the largest dedicated hydropower generator in the country.

Key Data Gaps

1. Competitor comparison data — no peer distribution metrics (SJVN, NTPC Hydro, THDC) available.
2. Segment-wise profitability — single reportable segment [37][100]; no margin data by power station or technology type.
3. Detailed channel economics — as a regulated generator selling via PPAs, traditional channel margin/incentive metrics do not apply.
4. Customer-wise PPA expiry schedule — not disclosed in aggregate; only PPA validity (40 years from COD for hydro) is known.
5. Multi-year consolidated revenue trend (FY21–FY25) — only FY24–FY25 consolidated and partial FY23 standalone available.
6. Subansiri Lower total revised cost — ₹27,949 Cr (revised estimate disclosed in Q3 FY26 call [99]); ₹25,691 Cr incurred through December 2025.
7. Tariff realization per unit (₹/kWh) by power station — not disclosed at station level; only aggregate average of ₹4.76/unit (S) [FY25] available [76].
8. Wind PPA extension status — Jaisalmer wind PPA expired 31 March 2019; extension "under process" but power continues to be scheduled [79].
9. REIA PPA conversion timeline — only ~6,000 MW of ~20,000 MW bid out have signed PPAs; execution trajectory uncertain given DISCOM hesitancy on standalone solar [97].