NHPC Company analysis

 

Industry profile :  Power is one critical component for development of economy. Lack of availability of power is not sustainable for growth and development. India is one of the country having diverse source of natural resource like Water, Coal, Lignite, Natural Gas, Oil, Nuclear power, wind which also help development of power sector. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on back of strong focus by the government on promoting renewable energy and implementation of projects in a time bound manner and moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.

Power sector in India is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

Total installed capacity of power stations in India stood at 330,260.53 Megawatt (MW) as on May, 2017. The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 per cent and 18 per cent for conventional energy.

The Government has added 10.2 Giga Watts (GW) of conventional energy generation capacity and 12.5 GW of renewable energy capacity in Financial Year 2017. Under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, thereby surpassing its target of 88.5 GW during the period.

Company Profile  :  The company is a hydroelectric power generating company and having operations in North and North east part of India. The company is holding expertise in the planning, development and implementation of an integrated and efficient network of hydroelectric projects in India. It executes all aspects of the development of hydroelectric projects, from concept to commissioning.  It has developed and constructed 22 (6717 MW) hydroelectric power stations. This includes two power stations with a combined capacity of 1,520 MW, constructed and operated through the Subsidiary, NHDC. Its power stations and hydroelectric projects are located predominantly in the North and North East of India, in the states of Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Assam, Manipur, Sikkim and West Bengal. Presently it is engaged in the construction of 3 additional hydroelectric projects having capacity 3130 MW. Further eight projects, including one joint venture project, with an anticipated capacity of 5133 MW , are currently awaiting sanction from the CCEA. Survey and investigation works are being carried out to prepare project proposal reports for 3 additional projects, totaling 1130 MW of anticipated capacity.

Shareholding Pattern  :  Government of India hold 74.5%. Mutual Funds hold 1.15%. Financial institution hold 0.77%. 9.18% held by Insurance companies. 3.79% held by foreign investors. Remaining is held by public.

Financial and Ratio  : 

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue4,905.486,715.416,299.426,993.997,663.588,353.828,729.84
Net profit2,166.672,771.772,348.22978.792,124.472,440.142,795.59
NPM44.1641.2637.2713.9927.7229.2032.02
EPS1.762.251.910.821.922.202.53
Book value19.9821.4222.6323.5525.5525.9726.26
Dividend Per share0.600.700.600.300.601.501.80
Dividend Payout34.0631.0631.4333.9331.2668.0590.28
ROE8.8110.518.433.757.518.4810.37
ROCE5.226.024.872.04 4.294.915.93
ROA4.555.254.301.813.834.425.34
Debt to Equity0.560.620.630.710.640.640.65
Asset Turnover8.8810.719.7310.2512.2613.4713.90

Future Prospects  :  The company was going through large capital expenditure. now it is completed and so the stock is moving after large consolidation period. Even if Hydro electric is renewable energy, the cost and other effect are large. and so the potential and future growth possibilities are not unlimited. Cost to build one dam in not small. Due to many other reason even if the cost of generation of hydro electric is small once the dam is built, but till that point, it is costly. in India due to population there is limitation on use of water for electricity generation. So future prospectus is limited

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter