📉 The Financial Deep Dive
NHPC Limited's financial results for the quarter and nine months ended December 31, 2025, present a complex picture, marked by a significant PBT loss in Q3 FY26 despite a reported increase in net profit, largely attributable to accounting adjustments.
The Numbers:
- Standalone Q3 FY26: Revenue from operations declined by 4.7% YoY to ₹1,877.47 Cr. Total expenses shot up by 25.4% YoY to ₹2,646.99 Cr, leading to a standalone Profit Before Tax (PBT) loss of ₹340.39 Cr, a sharp reversal from a profit of ₹314.31 Cr in the prior year. Despite this PBT loss, 'Profit for the period' (net profit) rose 7.0% YoY to ₹292.87 Cr, primarily due to a substantial ₹1,137.47 Cr 'Movement in Regulatory Deferral Account Balances' (net of tax).
- Standalone Nine Months FY26: Revenue grew 9.4% YoY to ₹7,587.01 Cr. However, PBT declined 29.3% YoY to ₹1,985.58 Cr, with net profit showing a modest 4.6% YoY growth to ₹2,290.26 Cr.
- Consolidated Q3 FY26: Consolidated revenue fell 2.9% YoY to ₹2,220.73 Cr. The company reported a consolidated PBT loss of ₹283.16 Cr, a significant shift from a profit of ₹399.38 Cr. Net profit, however, surged by 38.7% YoY to ₹320.60 Cr, again heavily influenced by regulatory deferral account movements.
- Consolidated Nine Months FY26: Revenue grew 9.5% YoY to ₹8,799.76 Cr, while PBT declined 22.3% YoY to ₹2,623.21 Cr. Net profit increased by 7.1% YoY to ₹2,305.58 Cr.
The primary concern for investors is the disconnect between operational profitability (PBT) and reported net profit. In standalone Q3, a PBT loss of ₹340.39 Cr was transformed into a net profit of ₹292.87 Cr. Similarly, consolidated PBT turned negative, yet net profit saw a significant uptick. This reliance on 'Regulatory Deferral Account Balances' for bottom-line growth raises questions about the sustainability and quality of earnings. Basic EPS, excluding these regulatory movements, turned negative at ₹(0.84) for standalone Q3, highlighting the operational performance.
Financial Deep Dive:
- Income Statement Drivers: The substantial 'Movement in Regulatory Deferral Account Balances' has masked declining operational profitability, especially in the standalone Q3 PBT. While nine-month revenues show healthy growth, the significant rise in total expenses YoY (25.4% standalone Q3, 25.2% consolidated Q3) is a point of concern.
- Balance Sheet: The company's leverage has increased. The Debt-to-equity ratio rose to 1.05 from 0.93 on a standalone basis and to 1.17 from 0.96 on a consolidated basis year-on-year. Liquidity has also tightened, with the current ratio declining YoY to 1.02 (standalone) and 1.12 (consolidated).
- Cash Flow: Details on cash flow from operations, CapEx, and free cash flow were not provided in the excerpt.
- Key Ratios: Operating margins compressed significantly: standalone Q3 operating margin dropped to 19.35% from 28.47% YoY, and consolidated Q3 margin contracted to 26.38% from 33.62% YoY.
NHPC declared an interim dividend of 14% (₹1.40 per share) for FY25-26. However, strategic shifts are also underway, including the cancellation of an MoU for a JV with GEDCOL for solar projects and the proposed exit from its 'Promoter' status in PTC India Limited, following a directive from the Ministry of Power.
🚩 Risks & Outlook:
The primary risks for NHPC revolve around its increasing financial leverage, the impact of rising expenses on operating profitability, and the continued dependence on regulatory accounting for reported net profit. The strategic decisions to exit certain ventures may also signal future operational focus or challenges. No specific forward-looking guidance was provided by management in this disclosure, leaving the outlook dependent on market conditions and regulatory frameworks.