NHPC Ltd:Annual Report 2023-24 Analysis

NHPC Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

NHPC Limited was incorporated in 1975. Initially, it was established as the National Hydroelectric Power Corporation Private Limited.

Headquarters Location and Global Presence #

The headquarters of NHPC is located in Faridabad, Haryana, India. While primarily focused on the Indian market, NHPC has been exploring opportunities for international projects, particularly in neighboring countries like Nepal and Bhutan.

Company Vision and Mission #

• Vision: To be a leading organization in sustainable development of hydro and renewable energy.
• Mission: To harness the hydro and renewable energy potential in an efficient, environment friendly and sustainable manner.

Key Milestones in their Growth Journey #

• 1975: Incorporation of NHPC.
• 1982: Commenced commercial operation of Baira Siul Hydroelectric Project (180 MW).
• 2009: NHPC got listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
• Ongoing: Continuous commissioning of new hydro projects and expansion into renewable energy sources.

Stock Exchange Listing Details and Market Capitalization #

NHPC is listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) under the ticker symbol NHPC. Market capitalization fluctuates but is typically in the multi-billion dollar range. (Refer to live financial data for current figures).

Recent Financial Performance Highlights #

Recent financial reports indicate steady revenue and profitability, driven by increased power generation and capacity additions. (Refer to the latest annual reports and financial news for specific figures).

Management Team and Leadership Structure #

The management team consists of a Chairman and Managing Director, along with functional directors overseeing areas like finance, technical operations, and human resources.

Any Notable Awards or Recognitions #

NHPC has received various awards and recognitions for its contribution to the power sector, project management, and corporate social responsibility. (Refer to the NHPC website and press releases for a detailed list).

Their Products #

Complete Product Portfolio with Categories #

NHPC’s primary product is electricity generated from:

• Hydroelectric Power: Generation from large and small hydro projects.
• Renewable Energy: Solar and Wind Power.

Flagship or Signature Product Lines #

The company’s core product line is hydroelectric power.

Key Technological Innovations or Patents #

NHPC focuses on adopting efficient hydro and renewable energy technologies, including advanced turbine designs, SCADA systems for grid management, and best practices for dam safety and environmental impact mitigation.

Manufacturing Facilities and Production Capacity #

NHPC does not manufacture equipment; instead, it operates power generation plants. Total installed capacity is continuously increasing as new projects are commissioned. (Refer to the NHPC website and annual reports for the most up-to-date installed capacity figures).

Quality Certifications and Standards #

NHPC adheres to relevant quality standards and certifications for its operations, including those related to environmental management, safety, and power quality.

Primary Customers #

Target Industries and Sectors #

• State Electricity Boards (SEBs)
• Power Distribution Companies (DISCOMs)
• Bulk Consumers

Geographic Markets (Domestic vs. International) #

Primarily focused on the domestic Indian market.

Major Client Segments (agricultural, industrial, residential, etc.) #

Supplies power to all major consumer segments:

• Agricultural
• Industrial
• Residential
• Commercial

Any Notable Government Contracts or Institutional Clients #

NHPC has significant power purchase agreements (PPAs) with various state governments and central utilities, making them major clients.

Distribution Network and Sales Channels #

NHPC primarily sells power through long-term PPAs with state utilities and through power exchanges.

Major Competitors #

Direct Competitors in India and Globally #

• NTPC Limited: A major thermal power generator also expanding into hydro and renewable energy.
• SJVN Limited: Another public sector hydro power company.
• Tata Power: A private sector player with a diversified energy portfolio.
• Adani Green Energy: A major player in the renewable energy sector.

Competitive Advantages and Disadvantages #

• Advantages: Extensive experience in hydro power development, government support, established infrastructure.
• Disadvantages: Vulnerability to hydrological risks (e.g., droughts), environmental and social concerns related to large hydro projects, long gestation periods for projects.

How they differentiate from competitors #

NHPC differentiates itself through its specialization in hydro power, its government backing, and its commitment to sustainable development practices in the hydro sector.

Industry Challenges and Opportunities #

• Challenges: Environmental clearances, resettlement and rehabilitation of displaced populations, funding constraints, grid connectivity issues.
• Opportunities: Growing demand for electricity, government focus on renewable energy, development of pumped storage projects, potential for export of power to neighboring countries.

Market Positioning Strategy #

NHPC positions itself as a reliable and sustainable provider of hydro and renewable energy, contributing to India’s energy security and environmental goals.

Future Outlook #

Expansion Plans or Growth Strategy #

NHPC aims to increase its installed capacity through the development of new hydro and renewable energy projects.

Sustainability Initiatives or ESG Commitments #

NHPC is increasingly focusing on environmental and social sustainability, including minimizing the environmental impact of its projects, promoting biodiversity conservation, and implementing robust resettlement and rehabilitation programs.

Financial Analysis of NHPC Limited (FY 2023-24) #

Standalone Financial Performance and Trend Analysis #

The financial data indicates a slight moderation in NHPC’s standalone performance in FY 2023-24 compared to the preceding two years.

Key Financial Metrics (₹ in Crores) #

Key Ratios #

Analysis #

• Revenue from operations (Sale of Energy) declined by 12.81% in FY24, primarily attributed to lower generation due to flash floods and reduced water inflow. Total income saw a marginal decrease of 1.24%.
• PBT and PAT decreased by 11.38% and 2.34% respectively in FY24. The higher PAT decline relative to PBT decline suggests changes in effective tax rates or regulatory income adjustments.
• Net Worth and Other Equity continued their growth trajectory, up by 5.25% and 7.33% respectively, indicating retained earnings and value accretion.
• A significant increase of 17.70% in CWIP to ₹29,794.72 crore highlights aggressive capital expenditure on ongoing projects.
• Long-term borrowings increased by 4.29%, supporting the capex. The Debt-Equity ratio remained stable and healthy at 0.84.
• Dividend per share increased to ₹1.90, indicating a consistent shareholder return policy. The total dividend payout for FY24 will be ₹1,908.55 crore (51% of PAT).
• EBITDA remained relatively stable with a slight decrease of 0.17%.

Detailed Analysis #

NHPC Limited FY 2023-24 Financial Analysis: Operating Performance #

Revenue Breakdown and Growth Rates (Standalone) #

Total Income #

• FY 2024: ₹10,024.99 crore (Standalone), a decrease of 1.24% from ₹10,150.90 crore in FY 2023.
• FY 2024: ₹10,997.02 crore (Consolidated), a decrease of 6.99% from ₹11,823.27 crore in FY 2023 (restated).

Revenue from Operations (Standalone) #

• FY 2024: ₹8,404.92 crore, a decrease of 9.79% from ₹9,316.34 crore in FY 2023.
• Primarily due to lower generation (21,779 MUs in FY24 vs. 24,907 MUs in FY23 standalone) and a decrease in sales pertaining to earlier years.
• Plant Availability Factor (PAF): 77.60% in FY24 vs. 88.75% in FY23.

Breakdown of Revenue from Operations (Standalone FY 2024) #

• Sale of Energy: ₹7,327.90 crore (decreased by 12.79% from ₹8,404.65 crore in FY 2023).
  • Average selling price (adjusted): ₹4.21/unit in FY 2024 vs. ₹3.97/unit in FY 2023.
  • Incentives earned: ₹457.81 crore in FY 2024 vs. ₹675.68 crore in FY 2023.
• Income from Finance Lease: ₹297.31 crore (decreased by 9.30% from ₹327.80 crore in FY 2023).
• Income from Operating Lease: ₹332.22 crore (decreased by 15.34% from ₹392.40 crore in FY 2023).
• Revenue from Contracts, Project Management and Consultancy Works: ₹56.29 crore (decreased by 7.63% from ₹60.94 crore in FY 2023).
• Revenue from Power Trading: ₹11.52 crore (Trading Margin) (increased by 150.43% from ₹4.60 crore in FY 2023).
• Other Operating Income: ₹379.68 crore (increased by 201.45% from ₹125.95 crore in FY 2023), mainly due to higher interest from beneficiary states on tari/ff revisions.

Other Income (Standalone) #

• FY 2024: ₹1,620.07 crore (increased by 94.12% from ₹834.56 crore in FY 2023).
• Key drivers: Increased dividend from subsidiaries (NHDC), higher income from insurance claims related to Teesta Basin flash floods, and realization of business interruption loss. Partially offset by lower Late Payment Surcharge (LPS).

Geographical Breakdown #

• Operates as a single geographical segment, with all power stations within India.
• Revenue from external customers (Nepal, Bhutan) was ₹0.11 crore in FY 2024 (FY 2023: ₹0.14 crore).

Cost Structure Analysis (Standalone Basis, FY 2024) #

Total Expenses #

• ₹5,962.79 crore (increased by 7.10% from ₹5,567.30 crore in FY 2023).
• As a % of Total Income: 59.48% in FY 2024 (vs. 54.85% in FY 2023).

Major Cost Components #

• Generation Expenses: ₹814.27 crore (13.66% of total expenses). Decreased by 13.03% YoY, primarily due to reversal of liability towards water cess in Himachal Pradesh and Sikkim.
• Employee Benefits Expense: ₹1,296.58 crore (21.74% of total expenses). Decreased by 0.37% YoY.
• Finance Costs: ₹425.13 crore (7.13% of total expenses). Decreased by 10.72% YoY, due to loan repayments and change in weighted average interest rate.
• Depreciation & Amortization Expense: ₹1,111.00 crore (18.63% of total expenses). Decreased by 3.01% YoY, mainly due to Sewa-II Power Station completing 12 years of life in FY23.
• Other Expenses: ₹2,315.81 crore (38.84% of total expenses). Increased by 35.59% YoY. Key drivers for increase:
  • Losses on insured assets (₹407.68 crore).
  • Insurance Expenses (₹125.35 crore).
  • Interest to Beneficiary states (₹69.27 crore).
  • Interest on arbitration/court cases (Vivad se Viswas scheme) (₹183.11 crore).
  • Partially offset by decreases in provision for impairment of investments, Fair Value Loss on Financial Assets, and CSR expenses.

Margin Analysis (Standalone Basis) #

EBITDA #

• FY 2024: ₹5,733.88 crore (FY 2023: ₹5,743.43 crore).
• EBITDA Margin: 68.22% in FY 2024 (vs. 61.65% in FY 2023). Increase driven by a sharper fall in Revenue from Operations relative to the slight fall in EBITDA.

Operating Profit Ratio #

• Using their stated ratio:
  • FY 2024: 38.08%
  • FY 2023: 42.52%
  • FY 2022: 45.68%
  • FY 2021: 48.73%
  • FY 2020: 45.91%
• The trend shows a general decline in operating profit margin over the last five years.

Net Profit Margin (PAT / Revenue from Operations) #

• PAT (Standalone): ₹3,743.94 crore (FY 2024), ₹3,833.79 crore (FY 2023).
• FY 2024: 44.54%
• FY 2023: 41.15%

Cash Flow Analysis of NHPC Limited (FY 2023-24) #

Cash Flow and Liquidity Analysis #

1. Cash Flow Analysis (Standalone Basis) #

1.1. Operating Cash Flow (OCF) Components (FY 2023-24) #

• Profit Before Tax (after RDA movement adjustment): ₹4,062.20 Crores
• Adjustments for non-cash items:
  • Depreciation & Amortization: +₹1,111.00 Crores
  • Finance Cost: +₹425.13 Crores
  • Provisions (Net): +₹16.80 Crores
  • Sales adjustment on a/c of FERV: +₹29.42 Crores
  • Loss on sale of assets/claims written off: +₹13.17 Crores
  • Fair value Adjustments: +₹34.15 Crores
  • Advance Against Depreciation written back: -₹50.42 Crores
  • Provisions/Liabilities not required written back: -₹138.11 Crores
  • Dividend Income: -₹497.54 Crores
  • Interest Income & Guarantee Fees (incl. LPS): -₹251.07 Crores
  • Exchange Rate Variation (Gain): -₹74.14 Crores
  • Amortization of Government Grants: -₹33.15 Crores
• Operating Profit before Working Capital Changes: ₹4,587.44 Crores
• Changes in Operating Assets & Liabilities: +₹1,810.50 Crores
• Cash Flow from Operating Activities before Taxes: ₹6,397.94 Crores
• Income Taxes Paid: -₹690.22 Crores
• Net Cash Flow from Operating Activities (A): ₹5,707.72 Crores (FY 2022-23: ₹3,907.35 Crores)

1.2. Investing Cash Flow (ICF) Components (FY 2023-24) #

• Purchase of PPE, CWIP, Intangibles (incl. RDA movement): -₹3,316.05 Crores
• Investment in JVs & Subsidiaries: -₹763.98 Crores
• Loan to Subsidiaries: -₹600.05 Crores
• Interest Income & Guarantee Fees Received: +₹163.87 Crores
• Dividend Income Received: +₹497.54 Crores
• Proceeds from Term Deposits (Net): +₹12.96 Crores
• Interest on Loan to Subsidiaries/JVs: +₹13.88 Crores
• Sale of Assets: +₹2.18 Crores
• Repayment of Loan by Subsidiaries: +₹625.00 Crores
• Proceeds from Sale of Investment: +₹150.00 Crores
• Receipt of Grant: +₹390.48 Crores
• Net Cash Flow from/(used in) Investing Activities (B): -₹2,824.17 Crores (FY 2022-23: -₹2,929.30 Crores)

1.3. Financing Cash Flow (FCF) Components (FY 2023-24) #

• Proceeds from Long Term Borrowings (Bonds & Loans): +₹4,046.94 Crores
• Repayment of Borrowings: -₹2,713.51 Crores
• Dividend Paid: -₹1,858.33 Crores
• Interest & Finance Charges Paid: -₹1,974.71 Crores
• Repayment of Lease Liability (incl. interest): -₹5.72 Crores
• Net Cash Flow from/(used in) Financing Activities (C): -₹2,505.33 Crores (FY 2022-23: -₹1,519.66 Crores)

1.4. Free Cash Flow (FCF) to Firm (Standalone Basis) #

• OCF (FY24): ₹5,707.72 Crores
• Capital Expenditure (Purchase of PPE, CWIP, Intangibles incl. RDA movement, FY24): ₹3,316.05 Crores
• FCF (FY24): ₹2,391.67 Crores
• OCF (FY23): ₹3,907.35 Crores
• Capital Expenditure (FY23): ₹2,767.79 Crores
• FCF (FY23): ₹1,139.56 Crores

2. Working Capital Management Efficiency (Standalone Basis) #

2.1. Debtors Turnover Ratio (Revenue from Operations / Average Debtors) #

• FY 2023-24: 1.68 times
• FY 2022-23: 1.75 times

2.2. Inventory Turnover Ratio (Revenue from Operations / Average Inventory) #

• FY 2023-24: 51.33 times
• FY 2022-23: 64.50 times

2.3. Current Ratio (Current Assets / Current Liabilities) #

• FY 2023-24: 0.90
• FY 2022-23: 0.99

2.4. Cash Conversion Cycle (CCC) (Approximate) #

• Trade Receivables (Current + Non-Current):
  • FY24: ₹3,983.95 Crores
  • FY23: ₹5,887.04 Crores
  • Average Trade Receivables (FY24): ₹4,935.50 Crores
• Inventories:
  • FY24: ₹177.00 Crores
  • FY23: ₹150.48 Crores

NHPC Limited FY 2023-24 Financial Performance Analysis #

Revenue and Profitability #

NHPC Limited reported a standalone Profit After Tax (PAT) of ₹3,743.94 crore for FY 2023-24, a slight decrease from ₹3,833.79 crore in FY 2022-23. Consolidated net profit stood at ₹4,028.01 crore compared to ₹4,260.83 crore in the previous year.

Total standalone income for FY 2023-24 was ₹10,024.99 crore, marginally down from ₹10,150.90 crore in FY 2022-23. Revenue from Operations (standalone) amounted to ₹8,404.92 crore in FY24, compared to ₹9,316.34 crore in FY23. This decline was primarily attributed to lower energy sales.

Sale of Energy (standalone) decreased by 12.79% to ₹7,327.90 crore in FY24 from ₹8,404.65 crore in FY23, mainly due to reduced generation and a decrease in sales pertaining to earlier years. Incentive income also fell to ₹457.81 crore from ₹675.68 crore. The average selling price (adjusted) was ₹4.21/unit for 19,138 MU sold in FY24, up from ₹3.97/unit for 21,622 MU in FY23.

Other Operating Income (standalone) increased significantly by 201.45% to ₹379.68 crore, largely due to interest from beneficiary states on revised tariffs. Other Income (standalone) also rose by 94.12% to ₹1,620.07 crore, buoyed by higher dividend income (₹497.54 crore), income from insurance claims (₹381.92 crore), and realization of business interruption loss (₹149.86 crore).

Operational Performance #

Total generation across NHPC’s standalone power stations was 21,779 Million Units (MUs) in FY24, down from 24,907 MUs in FY23. This included 21,615 MU from hydro, 72 MU from wind, and 92 MU from solar. The overall Plant Availability Factor (PAF) for FY24 was 77.60%, compared to 88.75% in FY23. The normative PAF for FY24 was 77.35%.

The decrease in generation was attributed to flash floods in Himachal Pradesh (July 2023) and Sikkim (October 2023), and overall lower water inflow. Despite this, six power stations met their annual design energy targets, and ten achieved their normative PAF.

Renovation & Modernization of the 105 MW Loktak Power Station is underway, with an approved DPR cost of ₹273.59 crore (Sept 2017 PL), aiming to increase design energy from 448 MU to 562.73 MU.

Expenditure Analysis #

Total standalone expenditure increased by 7.10% to ₹5,962.79 crore in FY24.

Generation Expenses #

Decreased to ₹814.27 crore from ₹936.46 crore, primarily due to reversal of water cess liability in Himachal Pradesh and Sikkim.

Employee Benefit Expenses #

Marginally decreased to ₹1,296.58 crore. Employee strength as of March 31, 2024, was 4,929.

Finance Costs #

Decreased by 10.72% to ₹425.13 crore due to loan repayments and changes in weighted average interest rates.

Depreciation & Amortization #

Decreased by 3.01% to ₹1,111.00 crore, mainly due to Sewa-II Power Station completing 12 years of life in FY23.

Other Expenses #

Increased by 35.59% to ₹2,315.81 crore, driven by higher losses on insured assets (₹407.68 crore), insurance expenses (₹125.35 crore), interest on arbitration cases (₹183.11 crore), and interest to beneficiary states (₹69.27 crore). This was partly offset by lower provisions for investment impairment and fair value losses.

Financial Ratios (Standalone) #

• Return on Net Worth: Decreased to 10.30% in FY24 from 11.13% in FY23.
• Return on Capital Employed: Stood at 6.83% in FY24 (Note: formula (PBT+Finance Cost)/(Net Worth+Total Borrowings+Deferred Tax Liabilities) implies this might be impacted by the regulatory deferral income component of PBT).
• Operating Profit Ratio: 38.08% in FY24, down from 42.52% in FY23.
• Net Profit Ratio (PAT/Revenue from Operations): Improved to 44.54% in FY24 from 41.15% in FY23.
• Debt-Equity Ratio: Improved to 0.82 in FY24 from 0.83 in FY23. (X+AG+AH)/AI.
• Current Ratio: Improved to 0.91 in FY24 from 0.88 in FY23.
• Interest Service Coverage Ratio: 11.21 in FY24 compared to 10.14 in FY23.
• Debt Service Coverage Ratio: 3.16 in FY24 compared to 2.77 in FY23.
• Book Value Per Share: Increased to ₹37.10 in FY24 from ₹35.25 in FY23.
• Earnings Per Share (Basic & Diluted, including RDA movements): ₹3.73 in FY24 compared to ₹3.82 in FY23.
• Price to Earning Ratio: Increased significantly to 24.03 in FY24 from 10.52 in FY23, driven by a substantial rise in market price per share.

Capital Structure and Liquidity #

• Net Worth: Increased to ₹37,268.61 crore as of March 31, 2024, from ₹35,407.96 crore a year ago.
• Paid-up Equity Share Capital: Remained unchanged at ₹10,045.03 crore.
• Borrowings: Long-term borrowings (including current maturities) stood at ₹29,389.22 crore, up from ₹28,254.69 crore. Short-term borrowings (including current maturities) were ₹3,052.77 crore. The company raised ₹2,000 crore through term loans and ₹2,046.94 crore via monetization of RoE for Kishanganga Power Station.
• Cash Flow:
  • Net cash from operating activities: ₹5,707.72 crore (FY23: ₹3,907.35 crore).

NHPC Limited Financial Analysis: FY 2023-24 #

Financial Performance (Standalone) #

• Total Income: ₹10,024.99 crore in FY 2023-24, a marginal decrease from ₹10,150.90 crore in FY 2022-23. Fluctuated over five years (FY20-FY24), peaking in FY23.
• Revenue from Operations: ₹8,404.92 crore in FY 2023-24.
• Profit Before Tax (PBT): ₹4,062.20 crore in FY 2023-24, compared to ₹4,583.60 crore in FY 2022-23 (a decrease of 11.38%).
• Profit After Tax (PAT): ₹3,743.94 crore in FY 2023-24, a slight decrease from ₹3,833.79 crore in FY 2022-23 (a 2.34% decrease).
• Consolidated PAT: ₹4,028.01 crore in FY 2023-24, down from ₹4,260.83 crore in FY 2022-23.
• EBITDA: ₹5,733.88 crore in FY24, marginally lower than ₹5,743.43 crore in FY23.
• Net Worth: Increased to ₹37,268.61 crore as of March 31, 2024, from ₹35,407.96 crore as of March 31, 2023 (a 5.25% increase).

Key Ratios (Standalone, FY24 vs FY23) #

• Return on Capital Employed: Decreased slightly.
  • FY24: 6.38%
  • FY23: 7.49%
• Return on Net Worth:
  • FY24: 10.30%
  • FY23: 11.13% (a decrease of 7.46%)
• Net Profit Ratio (PAT / Revenue from Operations): Improved.
  • FY24: 44.54%
  • FY23: 41.15%
• Book Value Per Share: Increased.
  • FY24: ₹37.10
  • FY23: ₹35.25
• Earning Per Share (EPS): Decreased slightly.
  • FY24: ₹3.73
  • FY23: ₹3.82
• Debt Equity Ratio: Marginally decreased.
  • FY24: 0.84
  • FY23: 0.85
• Price to Earning Ratio (PE Ratio): Increased significantly to 24.03 in FY24 from 10.52 in FY23.

Strategic and Management Analysis: NHPC Limited Financial Report (2023-24) #

Long-Term Strategic Goals and Progress #

NHPC’s long-term strategy focuses on expanding its clean energy portfolio, maintaining hydropower leadership, and diversifying into solar, wind, pumped storage, and green hydrogen. The company aims to significantly contribute to India’s renewable energy targets and net-zero ambitions by 2070.

Progress in FY 2023-24:

• Hydropower Expansion: Active construction exceeding 10,000 MW (including JVs/subsidiaries), including the 2,880 MW Dibang Multipurpose Project. The 2,000 MW Subansiri Lower and 800 MW Parbati-II HE Projects are nearing completion. MOAs were signed with Arunachal Pradesh for Subansiri Upper (1,605 MW) and Kamala (1,720 MW) HE Projects.
• Renewable Energy (RE) Diversification:
  • Solar: Foundation stone laid for a 300 MW Solar Plant in Bikaner (investment >₹1,732 crore). Inauguration of a 380 MW Solar Project in Jaisalmer. Under the MNRE-REIA Scheme, PPAs/PSAs for 3,000 MW solar power signed. A 200 MW solar project was secured in GSECL Solar Park, Khavda. A JPY 20 billion loan agreement with JBIC was signed for RE projects, including the Bikaner solar project.
  • Pumped Storage Projects (PSP): MOUs signed with Maharashtra for 7,350 MW PSP capacity, APGENCO for PSPs and RE in JV, ONGC for PSP & RE development, and Gujarat Power Corporation for ₹4,000 crore investment in Kuppa PSP (750 MW).
  • Floating Solar: MOU signed with Ocean Sun (Norway) for floating solar technology.
• Green Hydrogen: Pilot projects initiated for green hydrogen-based microgrids (Leh) and mobility stations (Kargil, Chamba).
• International Presence: Active engagement in Nepal with MOUs for West Seti (750 MW), Seti River (SR6) (450 MW), and Phukot Karnali (480 MW) HE Projects. DPR preparation is in progress.
• Consultancy: Signed MOU with Kerala State Electricity Board for a ‘Design Clinic’.

Competitive Advantages and Market Positioning #

NHPC possesses several competitive advantages:

• Expertise in Hydropower: Over 48 years of experience in developing, constructing, and operating hydroelectric projects, particularly in complex Himalayan geology.
• Integrated Capabilities: In-house “concept to commissioning” capabilities, including Design & Engineering, survey, geological investigation, and project management.
• Strong Financial Position: Net worth of ₹37,268.61 crore (standalone, as of March 31, 2024). Highest domestic credit rating (‘AAA’) and international rating (‘Baa3’ by Moody’s, at par with sovereign).
• Operational Excellence: Proven track record in operating a fleet of power stations. Most power stations are ISO 9001, ISO 14001, and ISO 45001 certified.
• Seismic Safety Assessment: Unique centralized Real-Time Seismic Data Centre (RTSDC) for monitoring power stations.
• Strategic Government Support: As a GoI Enterprise, it plays a key role in national energy policy and benefits from government initiatives for hydro and RE.

Market Positioning:

• Leading hydropower generator in India.
• Expanding role as a Renewable Energy Implementing Agency (RE

NHPC Limited FY 2023-24 Analysis #

Financial Performance Analysis (FY 2023-24) #

NHPC Limited reported a mixed financial performance for the fiscal year 2023-24. On a standalone basis, Profit After Tax (PAT) stood at ₹3,743.94 crore, a slight decrease from ₹3,833.79 crore in the previous year. Total standalone income also saw a marginal decline to ₹10,024.99 crore from ₹10,150.90 crore in FY23. Revenue from Operations (standalone) was ₹8,404.92 crore, down from ₹9,316.34 crore in the prior year. This decrease in operational revenue and PAT is primarily attributed to lower generation. Consolidated Net Profit was ₹4,028.01 crore compared to ₹4,260.83 crore in FY23, on a consolidated total income of ₹10,898.78 crore (FY23: ₹11,509.09 crore).

The company’s Net Worth (standalone) increased to ₹37,268.61 crore as of March 31, 2024, from ₹35,407.96 a year earlier. EBITDA (standalone) remained relatively stable at ₹5,733.88 crore against ₹5,743.43 crore in FY23. However, the EBITDA margin (standalone) improved to 68.22% from 61.65%, likely due to changes in the revenue mix or cost management efficiencies despite lower generation.

The Board has recommended a final dividend of ₹0.50 per equity share, which, combined with the interim dividend of ₹1.40 per share, results in a total dividend of ₹1.90 per share for FY24. This amounts to a total payout of ₹1,908.55 crore, representing approximately 51% of standalone PAT and 5.12% of standalone Net Worth, adhering to the company’s dividend distribution policy.

Key financial ratios indicate a stable financial structure. The Debt-Equity Ratio (standalone) was 0.84 as of March 31, 2024, compared to 0.85 in the previous year. The Return on Net Worth (standalone) decreased to 10.30% from 11.13% YoY, reflecting the dip in profitability. The Price to Earning (PE) ratio saw a significant increase to 24.03 from 10.52, driven largely by the appreciation in market price per share. Interest Service Coverage Ratio (standalone) improved to 3.16 from 3.01.

Operational Performance Analysis (FY 2023-24) #

NHPC’s power stations generated a total of 21,779 Million Units (MUs) during FY24, a decrease from 24,907 MUs in FY23. The overall Plant Availability Factor (PAF) was 77.60%, down from 88.75% in the previous year. The reduction in generation and PAF was attributed to flash floods in the Himachal region in July 2023, unprecedented flash floods from Lhonak Lake affecting the Teesta Basin projects in October 2023, and generally lower water inflows. Despite these challenges, six power stations achieved their annual design energy targets, and ten power stations met their normative PAF. Parbati-II HE Project (800 MW) commenced infirm power generation.

Significant progress was made on key under-construction projects. The Subansiri Lower HE Project (2000 MW) saw the installation of Spillway Radial Gates Nos. 7, 8, and 9, with three units expected to be commissioned by March 2025 and all units by May 2026. The foundation stone for India’s largest hydroelectric project, the 2880 MW Dibang Multipurpose Project, was laid, and Dirki Nalla diversion was completed, ensuring all-weather road access. Lanco Teesta Hydro Power Limited (LTHPL - Teesta Stage-VI, 500 MW) and Jalpower Corporation Limited (JPCL - Rangit-IV, 120 MW) projects, being executed by wholly-owned subsidiaries, achieved physical progress of 61.63% and 72.65% respectively. Projects under CVPPL (Pakal Dul, Kiru, Kwar) and RHPCL (Ratle) also reported ongoing construction activities.

Strategic Developments and New Initiatives #

NHPC is actively pursuing diversification into renewable energy and pumped storage projects (PSPs). The company signed MOUs for developing approximately 11,375 MW of PSPs across Maharashtra, Gujarat, Andhra Pradesh, Odisha, and other states. In solar energy, NHPC is implementing 1000 MW under the CPSU Scheme (including the 300 MW Bikaner Solar Plant, for which the foundation stone was laid), has 700 MW commissioned under REIA Tranche-I (including the inaugurated 380 MW Jaisalmer Solar Project), and won 400 MW in TBCB for GSECL’s Khavda solar park. An MOU for 10,000 MW RE parks in Rajasthan was signed by its subsidiary NHPC REL.

The company is also venturing into Green Hydrogen, with pilot projects initiated in Leh, Kargil, and Chamba. Internationally, NHPC is progressing with DPR preparation for West Seti (750 MW), Seti River (SR6) (450 MW), and Phukot Karnali (480 MW) HE Projects in Nepal.

Financially, NHPC raised ₹2,000 crore through bank term loans and ₹2,046.94 crore via monetization of RoE from Kishanganga Power Station. It also secured a JPY 20 billion loan from JBIC for renewable energy projects.

Financial Analysis Report: NHPC Limited - FY 2023-24 #

Standalone Financial Performance Overview #

NHPC Limited reported a standalone Profit After Tax (PAT) of ₹3,743.94 crore for the financial year (FY) 2023-24, a slight decrease from ₹3,833.79 crore in FY 2022-23. Total income for FY 2023-24 stood at ₹10,024.99 crore, compared to ₹10,150.90 crore in the previous year. Revenue from Operations amounted to ₹8,404.92 crore, down from ₹9,316.34 crore in FY 2022-23.

Income Analysis #

• Sale of Energy (standalone): ₹7,327.90 crore in FY 2023-24, a decrease from ₹8,404.65 crore in FY 2022-23, primarily due to lower generation.
• Other Operating Income: Increased to ₹379.68 crore from ₹125.95 crore, mainly due to interest from beneficiary states on tariff revisions.
• Other Income: Significantly increased to ₹1,620.07 crore from ₹834.56 crore, driven by higher dividend income (₹497.54 crore) and income from insurance claims (₹381.92 crore). Late Payment Surcharge (LPS) was lower at ₹25.96 crore due to better receivables realization.

Expenditure Analysis #

• Total Expenses: Increased to ₹5,962.79 crore from ₹5,567.30 crore.
• Generation Expenses: Decreased to ₹814.27 crore from ₹936.46 crore, mainly due to reversal of liability towards water cess in Himachal Pradesh and Sikkim.
• Employee Benefits Expenses: Marginally decreased to ₹1,296.58 crore from ₹1,301.35 crore.
• Finance Costs: Decreased by 10.72% to ₹425.13 crore from ₹476.16 crore, due to loan repayments and changes in weighted average interest rates.
• Depreciation & Amortization Expenses: Decreased by 3.01% to ₹1,111.00 crore from ₹1,145.44 crore, largely due to Sewa-II Power Station completing 12 years of life.
• Other Expenses: Increased by 35.59% to ₹2,315.81 crore, primarily due to higher losses on insured assets (₹407.68 crore), insurance expenses (₹125.35 crore), and interest on arbitration/court cases (₹183.11 crore).

Profitability #

• Profit Before Tax and Rate Regulated Income: ₹4,062.20 crore (FY24) vs ₹4,583.60 crore (FY23).
• Profit After Tax (PAT): ₹3,743.94 crore (FY24) vs ₹3,833.79 crore (FY23).
• EBITDA: ₹5,733.88 crore (FY24) vs ₹5,743.43 crore (FY23), a marginal decrease.

Key Financial Ratios #

• Return on Net Worth: 10.30% (FY24) vs. 11.13% (FY23).
• Net Profit Ratio (PAT / Revenue from Operations): 44.54% (FY24) vs. 41.15% (FY23).
• Book Value Per Share: ₹37.10 (FY24) vs. ₹35.25 (FY23).
• Earnings Per Share (Basic, including RDA movements): ₹3.73 (FY24) vs. ₹3.82 (FY23).
• Debt Equity Ratio: 0.83 (FY24) vs. 0

Financial Analysis Report: NHPC Limited - FY 2023-24 #

Auditor’s Opinion and Key Audit Matters (KAMs) #

Standalone Financial Statements #

The Joint Statutory Auditors (M/s Chaturvedi & Co., M/s P C Bindal & Co., M/s S N Dhawan & Co. LLP) issued an unmodified opinion, stating that the standalone financial statements give a true and fair view of the state of affairs as at March 31, 2024, and its profit, total comprehensive income, changes in equity, and cash flows for the year then ended, in conformity with Ind AS and other accounting principles generally accepted in India.

Key Audit Matters (Standalone) #

1. Regulatory Deferral Account Debit Balances and accruals of revenue pending tariff notifications: Due to the rate-regulated nature of the business, revenue recognition and the determination of recoverable amounts involve significant management judgment based on CERC regulations and past orders.
2. Contingent Liabilities - against claims from Contractors: Significant claims and litigations are pending, requiring management judgment in estimating amounts to be disclosed as contingent liabilities.
3. Recognition of MAT Credit and Regulatory Deferral (Credit) balances: Assessment of recoverability of MAT credit and related regulatory deferral balances involves judgment on future taxable profits.

Consolidated Financial Statements #

The Joint Statutory Auditors issued an unmodified opinion, stating that the consolidated financial statements give a true and fair view of the consolidated state of affairs, consolidated profit, consolidated total comprehensive income, consolidated changes in equity, and consolidated cash flows of the Group and its Joint Venture for the year ended March 31, 2024.

Key Audit Matters (Consolidated) #

Similar to standalone KAMs, focusing on:

1. Regulatory Deferral Account Debit Balances and revenue accruals for the Holding Company.
2. Impairment Assessment of carrying amount of Cash Generating Units (CGUs) of the Holding Company, requiring significant judgments on future cash flow forecasts and discount rates.
3. Contingent Liabilities against claims from contractors for the Holding Company.
4. Recognition of MAT Credit and Regulatory Deferral (Credit) balances for the Holding Company.

Comptroller and Auditor General of India (C&AG) Comments #

The C&AG, after conducting a supplementary audit, stated that nothing significant came to their knowledge which would give rise to any comment upon or supplement to the statutory auditors’ report on both standalone and consolidated financial statements for FY 2023-24.

Key Accounting Policies and Changes #

Compliance #

Financial statements are prepared on a going concern basis, following the accrual system and comply with Ind AS, the Companies Act, 2013, and provisions of the Electricity Act, 2003.

Basis of Measurement #

Primarily historical cost, except for certain financial assets/liabilities at fair value and plan assets of defined benefit plans at fair value.

New and Revised Standards (FY 2023-24 Application) #

• Ind AS 1 Amendment (Disclosure of Accounting Policies): Requires disclosure of material accounting policies rather than significant ones. The company has evaluated and suitably modified its policies; no material impact on prior period amounts or significant effect on current/future periods anticipated.
• Ind AS 8 Amendment (Definition of Accounting Estimates): Clarifies distinguishing changes in accounting policies from changes in accounting estimates. No impact on the company’s financial statements.
• Ind AS 12 Amendment (Deferred Tax - Assets/Liabilities from a single transaction): Narrows the scope of initial recognition exemption. No impact on the company’s financial statements.

Key Material Accounting Policies #

• Revenue Recognition: Sale of power is accounted for as per tariff notified by CERC. Where tariff is pending, provisional rates are adopted. Revenue from project management/consultancy is recognized using the input method. Power trading revenue is recognized based on whether NHPC acts as principal or agent.
• Property, Plant, and Equipment (PPE) & CWIP: Measured at cost of acquisition/construction less accumulated depreciation/impairment. Borrowing costs attributable to qualifying assets are capitalized.
• Regulatory Deferral Accounts (RDA): Recognized for expenditures/incomes permitted by CERC to be recovered/passed on in future tariffs but accounted for differently under Ind AS. Assessed for recoverability and impairment.
• Leases (Ind AS 116): Assesses contracts for lease components. Recognizes Right-of-Use (ROU) assets and lease liabilities. For embedded finance leases (as lessor, e.g., certain PPAs), investment is recognized as Lease Receivable.
• Impairment: Assessed at each reporting date for CGUs. No significant impairment indicators noted for FY 2023-24 beyond existing provisions for certain investments (LDHCL, NHPTL).
• Foreign Currency Transactions: Translated at functional currency spot rates. Specific treatments for exchange differences on borrowings pre-dating Ind AS adoption or covered by CERC tariff regulations (via RDA or deferred FERV accounts).

Changes in Accounting Policies (FY 2023-24) #

• Added policy on “Recognition of assets held for sale” as per Ind AS 105, leading to regrouping of ₹7.74 crore (standalone) / ₹8.11 crore (consolidated) of surplus/obsolete assets. Impact on profit was insignificant.
• Modified existing policies due to Ind AS 1 amendment on disclosure of material accounting policies; no significant impact on recognized amounts.

Internal Control Effectiveness #

Auditors’ View (Standalone & Consolidated) #

The Joint Statutory Auditors reported that the Company (and the Group, including Indian subsidiaries and JV) has, in all material respects, an adequate internal financial control system with reference to standalone (and consolidated) financial statements, and such controls were operating effectively as at March 31, 2024. This is based on criteria established by the Company considering the essential components stated in the ICAI Guidance Note.

Management Responsibility #

The Board of Directors is responsible for establishing, maintaining, and evaluating the effectiveness of internal financial controls.

Directors’ Responsibility Statement #

Confirms that directors had laid down internal financial controls and that such controls are adequate and operating effectively.

Internal Audit #

The Company has an in-house internal audit department. Audit observations and action taken reports are submitted to the Audit Committee. An independent firm (M/s A.M.A.A & Associates) provided assurance on the implementation of Internal Financial Controls for FY 2023-24.

Accounting Software #

The Company uses accounting software with an audit trail (edit log) facility, which operated throughout the year for all relevant transactions, and no tampering was reported by auditors.

Regulatory Compliance Status #

Secretarial Audit (FY 2023-24 by M/s Kumar Naresh Sinha & Associates) #

• Generally complied with the Companies Act, SCRA, Depositories Act, FEMA (to extent applicable), SEBI Regulations, Secretarial Standards, SEBI LODR, and DPE Guidelines.
• Observation: The number of Independent Directors on the Board was less than 50% during the period from April 1, 2023, to September 17, 2023, not in conformity with Regulation 17(1)(b) of SEBI LODR and DPE Guidelines. Management’s reply cites that appointments are made by the President of India, and the matter was pursued with the Ministry of Power.

SEBI LODR & DPE Guidelines #

• The Corporate Governance report states compliance with SEBI LODR Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46, except for the Independent Director composition issue mentioned above.
• Complied with DPE Guidelines on Corporate Governance, except for certain clauses related to the ID composition.

Penalties from Stock Exchanges #

• Received communications from BSE & NSE imposing penalties for non-compliance with SEBI LODR Reg 17(1) (ID composition) for the quarter ended December 2023.
• NSE waived the fine; BSE response awaited for certain periods (fine for Reg 21 for Q3 FY21 not waived by BSE).