NHPC Ltd. Report

NHPC LTD.

9th Oct 2021

RECOMMENDATION : BUY

MARKET PRICE : Rs.30.60 (As on 8th Oct 2021)

TARGET PRICE : Rs.37.00

FACE VALUE : Rs.10

BSE CODE : 533098

NSE CODE : NHPC

NHPC Ltd. has become the largest organisation for hydropower development in India, with capabilities to undertake all the activities from conceptualisation to commissioning in relation to setting up of hydro projects. The Company has also diversified in the field of Solar & Wind power.

The Company has an installation base of 7071.2 MW from 24 power stations including 2 projects in JV mode. Considering the impediments faced during execution of these projects such as unfavourable geological conditions, difficult law and order problems, inaccessible and remote locations, the achievement so far is commendable.

ABOUT THE COMPANY

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YEARLY RESULTS OF NHPC (in Rs. Cr.) MAR '21 MAR '20 MAR '19 MAR '18 MAR '17

Net Sales/Income from operations 9,647.89 10,008.07 8,982.87 7,751.24 8,416.47

Other Operating Income -- -- -- -- 206.66

Total Income From Operations 9,647.89 10,008.07 8,982.87 7,751.24 8,623.13

EXPENDITURE

Purchase of Traded Goods -- -- 12.68 -- --

Employees Cost 1,540.40 1,676.09 1,849.93 1,708.06 1,678.16

Depreciation 1,298.30 1,614.04 1,657.96 1,479.10 1,461.75

Other Expenses 2,760.14 2,837.85 2,120.35 1,841.34 2,101.65

P/L Before Other Inc., Int., Excpt. Items & Tax 4,049.05 3,880.09 3,341.95 2,722.74 3,381.57

Other Income 1,057.15 768.57 863.94 1,101.36 1,503.78

P/L Before Int., Excpt. Items & Tax 5,106.20 4,648.66 4,205.89 3,824.10 4,885.35

Interest 649.95 795.98 895.14 922.64 1,073.44

P/L Before Exceptional Items & Tax 4,456.25 3,852.68 3,310.75 2,901.46 3,811.91

Exceptional Items 32.35 -240.50 843.42 736.17 718.79

P/L Before Tax 4,488.60 3,612.18 4,154.17 3,637.63 4,530.70

Tax 900.98 290.50 1,323.62 862.85 1,053.11

P/L After Tax from Ordinary Activities 3,587.62 3,321.68 2,830.55 2,774.78 3,477.59

Net Profit/(Loss) For the Period 3,587.62 3,321.68 2,830.55 2,774.78 3,477.59

Minority Interest -325.13 -450.11 -240.18 -270.80 -450.91

Share Of P/L Of Associates -5.49 3.04 5.24 -0.08 2.74

Net P/L After M.I & Associates 3,257.00 2,874.61 2,595.61 2,503.90 3,029.42

Equity Share Capital 10,045.03 10,045.03 10,045.03 10,259.32 10,259.32

Reserves Excluding Revaluation Reserves 23,045.26 21,325.58 20,752.78 19,781.87 18,755.50

EPS BEFORE EXTRA ORDINARY

Basic EPS 3.03 2.86 2.54 1.72 2.09

Diluted EPS 3.24 2.86 2.54 1.72 2.09

EPS AFTER EXTRA ORDINARY

Basic EPS. 3.03 2.86 2.54 1.72 2.74

Diluted EPS. 3.24 2.86 2.54 1.72 2.74

Key

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KEY FINANCIAL RATIOS OF NHPC (in Rs. Cr.) MAR 21 MAR 20 MAR 19 MAR 18 MAR 17PER SHARE RATIOSBasic EPS (Rs.) 3.03 2.86 2.54 2.45 2.74Diluted EPS (Rs.) 3.24 2.86 2.54 2.45 2.74Cash EPS (Rs.) 4.86 4.91 4.47 4.15 4.81Book Value [ExclRevalReserve]/Share (Rs.) 35.76 33.98 33.52 32.14 31.58Book Value [InclRevalReserve]/Share (Rs.) 35.76 33.98 33.52 32.14 31.58Revenue from Operations/Share (Rs.) 9.60 9.96 8.94 7.56 8.41PBDIT/Share (Rs.) 6.38 6.23 5.84 5.17 6.19PBIT/Share (Rs.) 5.08 4.63 4.19 3.74 4.76PBT/Share (Rs.) 4.47 3.60 4.14 2.96 3.72Net Profit/Share (Rs.) 3.57 3.31 2.82 2.71 3.39NP After MI And SOA / Share (Rs.) 3.24 2.86 2.58 2.45 2.95PROFITABILITY RATIOSPBDIT Margin (%) 66.38 62.57 65.27 68.37 73.60PBIT Margin (%) 52.92 46.44 46.82 49.43 56.65PBT Margin (%) 46.52 36.09 46.24 39.19 44.20Net Profit Margin (%) 37.18 33.19 31.51 35.90 40.32NP After MI And SOA Margin (%) 33.75 28.72 28.89 32.41 35.13Return on Networth/Equity (%) 9.84 9.16 8.42 8.36 10.44Return on Capital Employed (%) 7.71 7.19 6.94 6.74 8.94Return on Assets (%) 4.45 4.02 3.88 3.99 5.03Total Debt/Equity (X) 0.66 0.69 0.57 0.57 0.60Asset Turnover Ratio (%) 13.18 14.02 13.46 12.32 14.32LIQUIDITY RATIOSCurrent Ratio (X) 2.40 2.48 2.41 2.14 2.02Quick Ratio (X) 2.38 2.46 2.39 2.12 2.00Inventory Turnover Ratio (X) 72.17 79.04 71.76 74.09 85.55Dividend Payout Ratio (NP) (%) 0.00 67.44 38.54 49.78 83.32Dividend Payout Ratio (CP) (%) 0.00 43.19 23.52 31.42 56.20Earnings Retention Ratio (%) 0.00 32.56 61.46 50.22 16.68Cash Earnings Retention Ratio (%) 0.00 56.81 76.48 68.58 43.80COVERAGE RATIOSInterest Coverage Ratios (%) 7.86 5.84 4.70 4.16 4.55Interest Coverage Ratios (Post Tax) (%) 7.86 5.84 4.70 4.16 4.55VALUATION RATIOSEnterprise Value (Cr.) 47,100.98 42,716.55 42,945.30 44,991.06 50,339.04EV/Net Operating Revenue (X) 4.88 4.27 4.78 5.80 5.84EV/EBITDA (X) 7.35 6.82 7.32 8.48 7.93MarketCap/Net Operating Revenue (X) 2.55 2.00 2.77 3.66 3.81Retention Ratios (%) 0.00 32.55 61.45 50.21 16.67Price/BV (X) 0.74 0.64 0.81 0.94 1.13Price/Net Operating Revenue 2.55 2.00 2.77 3.66 3.81Earnings Yield 0.13 0.14 0.10 0.09 0.09

Shareholding Pattern an on Jun’21

Summary ❖ With deliverance of robust performance in Q1 of FY22, the Company Net Sales were Rs.2417.12 crs in Jun’21 as compared to

Rs.2779.48 crs in Jun’20. However, the Net Profits rose up by 17.55% i.e. Rs.907.77 crs in Jun’21 versus Rs.772.20 crs in Jun’20.

❖ Taking into consideration healthy fundamentals and sound valuations, the Company is available at a fair price of Rs.30.60 with its 52 week low at Rs.19.70 and 52 week high at Rs.31.00.

❖ Since the Promoters are holding majority stake around 70.95% as well as its consistent performance, it is fair to assume that the Management is working towards growth of the Company.

❖ The Shareholding Pattern as on Jun’21, shows the FIIs and the Other DIIs cumulatively stood with 4.99% stake. Whereas, the Mutual Fund Houses own 6.86% holdings in the Company.

❖ NHPC Ltd. is held by SBI MF, HDFC MF, CPSE ETF, BHARAT 22 ETF, FRANKLIN TEMPLETON MF, ICICI PRU MF, MAHINDRA MANULIFE MF, NIPPON INDIA MF, BARODA MF, IDBI MF, MOSL MF and a few more.

❖ On consolidated basis, the Company registered Return on Equity (ROE) and Return on Capital Employed (ROCE) around 9.84% & 7.71% respectively as on Mar’21.

❖ For the year ending Mar’21, NHPC Ltd. has declared an equity dividend of 16.00% i.e. Rs.1.60 per equity share. The Company has a good dividend track report and has consistently declared dividends for the last 5 years.

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Note: Subject Company is a company on which buy/sell recommendation or target price is given or changed in the research report.

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