Whalesbook
📉 The Financial Deep Dive
NHPC Limited presented a mixed financial picture for the nine months and third quarter ended December 31, 2025 (FY'26).
The Numbers:
For the nine months of FY'26, NHPC reported a 10% Year-on-Year (YoY) increase in Revenue from Operations to ₹8,800 Crore, up from ₹8,033 Crore in the prior year period. Profit After Tax (PAT) saw a 7% YoY growth, reaching ₹2,306 Crore from ₹2,153 Crore. Power generation climbed 15% YoY to 25,849 Million Units (MUs), largely due to the commissioning of the Parbati-II Power Station. However, the Plant Availability Factor (PAF) decreased by 3% YoY to 79.27% due to station shutdowns.
In contrast, the third quarter (Q3) of FY'26 witnessed a 3% YoY decline in Revenue from Operations to ₹2,221 Crore from ₹2,287 Crore. Management attributed this dip primarily to the absence of a significant one-off revenue of approximately ₹500 Crore recognized in the previous year's Q3, related to pay anomalies and interest on arbitration.
Quality of Earnings & Cost Drivers:
Other Income declined by 25% YoY for the nine months and 18% for Q3 FY'26, linked to lower insurance claim realizations. Employee costs and finance costs saw reductions due to the resolution of pay anomalies and lower interest on legal cases, respectively. Conversely, Depreciation and Amortization expenses rose due to new capacity additions, while Other Expenses experienced a substantial increase, driven by General Network Access Charges and Insurance expenses. Tax expenses also increased due to deferred tax adjustments and MAT credit.
Total incentives for the nine months increased to ₹547 Crore (from ₹515 Crore), and for Q3 FY'26 rose to ₹282 Crore (from ₹159 Crore).
Capital Expenditure (CAPEX) for the nine months of FY'26 stood at ₹8,844 Crore, an increase from ₹7,405 Crore in the corresponding period of the previous year, signaling aggressive investment.
The Grill:
Management responded factually to queries regarding revenue recognition for new projects, explaining the conservative approach of accounting for 80% of estimated revenue pending final Central Electricity Regulatory Commission (CERC) tariff orders. They anticipate interim tariffs for Subansiri Lower within two months and final tariff for Parbati-II in 5-6 months. The transcript did not indicate an aggressive 'grill' from analysts, with discussions focused on operational and strategic aspects.
Risks & Outlook:
NHPC faces challenges in securing Power Purchase Agreements (PPAs) for its renewable energy projects, citing connectivity issues and a market shift towards round-the-clock supply requiring battery storage. Despite this, the company is hopeful of signing PPAs for 2000-3000 MW in the next 2-3 months. Management outlined ambitious CAPEX plans, with ₹13,300 Crore earmarked for FY'26 and ₹15,000 Crore for FY'27, alongside a pipeline of 10,000 MW of new hydro projects and 1000 MW of solar commissioning in CY 2026. The company also plans to explore Pumped Storage Plants (PSPs). NHPC expressed optimism for FY'26 and beyond, emphasizing its commitment to clean energy expansion. Key project milestones include the commissioning of Subansiri Lower units and Karnisar Solar, progress on the Dibang project tender, and the Etalin Hydroelectric Project moving to NHPC's balance sheet.