Earnings call transcript: NHPC Q4 2025 sees revenue surge, stock dips

NHPC reported a mixed FY25, with revenue increasing 7% to INR 8,994 crore, but annual profit after tax declined 17% to INR 3,084 crore, largely due to a 9% decrease in power generation from issues like the Tista V flood and certain financial adjustments. However, Q4 FY25 profit showed a strong 29% sequential increase. The company maintains an optimistic outlook, with the 800 MW Parvati II project now fully operational and the Subansiri project expected to generate an incremental INR 4,000-4,500 crore annually upon full commissioning by May 2026, as NHPC aggressively expands its hydroelectric, solar, and pumped storage portfolio. A 19.1% dividend was also recommended, signaling continued shareholder returns amidst significant project pipeline development.

Analysis

NHPC reported a mixed financial performance for FY25, characterized by top-line growth but a decline in annual profitability. Revenue increased by 7% year-over-year to INR 8,994 crore, driven primarily by adjustments from prior years and unbilled revenue. However, this was overshadowed by a 17% year-over-year decrease in profit after tax (PAT) to INR 3,084 crore. The profit decline is directly attributable to a 9% drop in power generation, caused by the non-recurring shutdown of the Tista V Power Station following a flash flood, coupled with higher employee expenses and unfavorable tax adjustments. Despite the annual decline, a strong sequential recovery was evident in Q4 FY25, where PAT surged 29% from the previous quarter, indicating improving operational dynamics.

The forward-looking outlook is significantly more positive, underpinned by a robust project pipeline poised to drive substantial growth. The 800 MW Parvati II project is now fully operational, providing an immediate revenue stream. More critically, the 2,000 MW Subansiri project is on track for phased commissioning between June 2025 and May 2026, with management projecting it will generate an incremental INR 4,000-4,500 crore in annual revenue upon completion. This represents a potential ~50% uplift to the current revenue base. Beyond this, NHPC is advancing a large portfolio of hydroelectric projects, including the 2,880 MW Dibang project, and is actively diversifying into solar and pumped storage, with multiple projects under development across India. This aggressive expansion signals a clear strategy to solidify its leadership in India's renewable energy sector.

Key Decisions for Investors

• Investors should look beyond the headline FY25 profit decline, as it was heavily impacted by a one-off operational disruption at the Tista V station and specific accounting provisions, and instead focus on the strong sequential profit recovery in Q4.
• Consider the imminent revenue inflection point, with the newly commissioned Parvati II project and the massive Subansiri project expected to significantly accelerate revenue and earnings growth starting from FY26.
• Monitor project execution as a key variable; while the pipeline is a major catalyst, any delays in commissioning key projects like Subansiri could defer the anticipated financial benefits.
• Acknowledge the company's long-term value proposition, which is enhanced by its strategic diversification into solar and pumped storage, mitigating reliance on hydropower and aligning with India's broader energy transition goals.