NHPC Limited analyst Q&A

We will now begin the question-and-answer session. The first question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.

Good afternoon, sir and thanks for the opportunity. My first question, is it possible to share the Adjusted PAT for the quarter? And what was the profit in Subansi ri and Parbati-II in Q4 and the fiscal?

Mohit, You have seen the Reported PAT. So, if you want to reach at the Adjusted PAT, as D(F) sir has shared with you that there was one-off tax adjustment in DTL, because we all know that we have opted for the lower tax regime of 25% under Sec. 115BAA as MAT Credit facility is going to be discontinued from FY’27 onwards. Therefore, whatever deferred tax liability we had created at higher rate, that needs to be restricted at 25%. So, their impact is around Rs. 1,156 Crore which we have already reported under note #8 of our financial results. So, net impact of this deferred tax liability adjustment comes to around Rs. 900 Crore. So, if you reduce Rs. 900 Crore from the Reported PAT, you will arrive at Adjusted PAT. That is the one adjustment you have to carry out in our Reported PAT vis-à-vis our Adjusted PAT.

Understood. That was standalone and consolidated also, right?

Of course.

What is the profit in Subansiri and Parbati-II in Q4 and fiscal? We understand that the PAF was lower in quarter for Subansiri and Parbati-II. What is the status of the petition of those two assets?

So far the profitability of Parbati-II and SLP is concerned, we have earned Rs. 104 Crore profit from Parbati-II in Q4 and Rs. 487 Crore profit from SLP in Q4. On yearly basis, Parbati-II has given a loss of Rs. 150 Crore whereas on yearly basis, SLP has given a total profit of Rs. 495 Crore.

Why Par bati-III seems to have been shut for the last few months , is there any particular reason?

Yes, actually some maintenance wa s going on there and th ese units are already resumed.

Okay, understood sir. Thank you and all the best. I will come back in the queue.

We have next question from the line of Aniket Mittal from SBI Mutual Fund. Please go ahead.

Thank you. Just a follow -up on the previous question actually. So , you said that Parbati reported a profit in the 4th Quarter versus a loss for the full year. What is leading to the profit improvement?

Yes, so basically at the end of the financial year, we compute the shortfall of energy which we are supposed to recover. So in Parbati-II, we have shortfall of energy to the extent of Rs. 200 Crore which has been booked under revenue. That is the reason Parbati-II has given the profit of Rs. 104 Crore in Q4.

Okay. What is the percentage at which we are billing Parbati and Subansiri?

We have already started billing of Parbati-II based on the interim tariff notification of CERC. So 75% billing, we are already doing there.

And in case of Subansiri?

For Subansiri, we are waiting for the interim tariff notification of C ERC and we will be starting it once we get the interim tariff notification of Subansiri Lower.

Okay, but currently till the time the interim order comes in, what is the billing looking like?

We have been booking our revenue based on the 80% of the total expected AFC in Subansiri Lower and Parbati-II, both. But billing, we can start only after getting interim tariff order from CERC.

Understood. So now the billing for Par bati is 75 and just on the tariff adoption, I know the hearing for Parbati has been delayed. When do we see this tariff reduction come through for both Subansiri and Parbati?

Aniket, we have the next hearing date of Parbati-II on 25th of this month only. So, there we are expecting th at orders will be reserved. Hopefully, on 25th May, this tariff petition hearing will be completed and the order will be reserved. We will be expecting the final orders by the end of this quarter.

And Subansiri, we have done the tariff filing?

For Subansiri, we have already filed the tariff petition and we are expecting interim tariff order first, thereafter, there will be a hearing for provisional order. As in case of Parbati-II, first interim order was issued by C ERC. After that, we have been able to bill at the rate of 75% of the file d tariff. Similarly, in case of Subans iri Lower, C ERC will be issuing this interim order first and thereafter , we are expecting in another six months or so after this interim tariff is issued by CERC in respect of Subansiri Lower.

Just to understand, so let us say if you were to bill at 75% of revenue, what is the under-recovery on profits that comes through, what is the expected profit?

The point is that, as Mr. Saroj has said, that we are booking the revenue at 80% of the tariff filed with the CERC as we are taking a conservative approach. We are booking at the rate of 80% of the revenue and 75% is just for the billing part. Once this order is there and our expectation is not less than 80%, in case there is a higher interim order, in that case we will book the difference and along with interest, the total billing will be done at that point of time after the order is issued.

Aniket, just to reply to your question, so far we have booked Rs. 1,320 Crore of revenue in Parbati-II at 80% of the AFC. If you gross up this Rs. 1,320 Crore, you will arrive at somewhere Rs. 1,600-odd Crore. So, there is an under -recovery of Rs. 300 Crore if you look at the filed tariff petition of Parbati-II. So, Rs. 300 Crore kind of under-recovery in Parbati-II and similarly, if you calculate the total AFC of Subansiri Lower also, there also we have Rs. 150 Crore kind of under-recovery. So, altogether Par bati-II and Subansiri Lower, Rs. 450 Crore of revenue has not been booked in our book of accounts if you look at the tariff petition filed in respect of these two projects.

Understood. Fairly clear. Just on Teesta-V, just to recollect, what has been the impact in this year? Just to clarify, in Teesta-V, there is no insurance coverage over here anymore. When do we expect that project to restart as well?

So, there is no revenue, only expenditure has been there in T eesta-V. So, there is nothing top-line contribution from Teesta-V, but going forward, we are very much sure that June onwards, we are going to have operation to get resumed in respect of Teesta-V. So, by end of June onwards, you can see some top -line activity in Teesta-V also.

And the under-recovery full year would have been how much in Teesta-V?

In respect of T eesta-V, we have total AFC of around Rs. 500 Crore. So, if you exclude the tax element, it would be around Rs. 400 Crore.

And just a clarification. This Rs. 150 Crore of under-recovery in Subansiri is for how many units?

Three units.

I got that. I will come back for any further questions. Thank you.

We have next question from the line of Murtaza from Kotak. Please go ahead.

Hi, sir. A lot of my questions were related to Parbati-II and Subansiri. But, just to understand this correctly, when you talk about Rs. 1,600 Crore revenue for Parbati- II, is it reasonable then to say that Rs. 150 Crore loss which you have for FY’26 would have been about Rs. 150 Crore profit. Is that the right way to think of it or is there anything out of it?

Exactly, you have explained very correctly.

Okay and just to understand on this 4th quarter where you talked about booking the additional revenue because of the shortfall in generation, but does that still come within? So, is it fair to say that in your reported financials for Par bati-II, for instance, you accounted Rs. 1,320 Crore of revenue or is it slightly more because of that additional Rs. 200 Crore that you talked about?

So, that includes Rs. 200 Crore as well.

Rs. 1,320 Crore includes Rs. 200 Crore as well?

Of course.

Okay. Thank you.

We have next question from the line of Ragini Pandey from Elara Capital. Please go ahead.

So, from which year we can see the commissioning of your PSP projects? And what will be the realization for this plant and the CAPEX for these projects?

Ragini, we have not started any construction of PSP projects. So, it is very early to say about reali zation and other thin g because the fastest running project in the ambit of this PSP project is Omkareshwar-Indira Sagar (640 MW) Project. We are expecting to start construction activities there during the current fiscal. Once we get everything in place and we start construction activities, we will have better clarity about the reali zation, the tariff and everything. So, give us some time to share more facts about this Omkareshwar-Indira Sagar Project.

Yes and as a REIA, are you seeing any slowdown in your renewable tendering this year? And there was a backlog of around 40 GW in PPA signing. So, any improvement on that?

So, we have not done any tendering in recent past. Whatever tendering we had made, we have already awarded around 23 GW kind of capacity, out of which 13 GW kind of likely PPA and PSA signing we are hoping, out of which 7 GW approx. we have already signed. So, going forward, we will again have more clarity in months to come in respect of REIA projects also.

Okay. And are you expecting any slowdown in generation given this is a El Nino year and there are expectation of weaker monsoon this year?

No. As you are aware, you have been tracking NHPC for years, most of our power stations are snow -fed. So, certainly good monsoon will be helping us for better generation but our generation currently also is going fairly well.

I want to know the normative PAF of your plants?

Consolidated it is 82%, standalone it is 80%.

Okay. This year the overall PAF was less than 80%, right?

There are two things. If you look at the actual PAF with Teesta -V, it is certainly lower, 75%. But if you exclude Teesta -V, it is 80%. So, Teesta -V has not contributed anything during the last fiscal as well as the corresponding fiscal. In both the fiscal, if you exclude Teesta-V, you will get 80% kind of PAF. But, if you include Teesta-V, certainly it is 75%.

Yes, okay. Thank you.

We have next question from the line of Riya Mehta from Equitas Investments. Please go ahead.

Thank you so much for giving me the opportunity. Sir, my first question is in terms of what will be our equity value for next year and if you could just help me for the next couple of years?

I think, you are talking about regulated equity?

Yes.

Current regulated equity, including Parbati -II, is Rs. 18,309 Crore. In next financial year, if you consider the capacity addition, we are having capacity addition of 1,250 MW of Subansiri, out of which 250 MW we have already commissioned. So, balance 1,000 MW would be coming from Subansiri, then we have 120 MW Rangit-IV, then 1,000 MW Pakal Dul, 624 MW Kiru. So, all these hydro assets, we are goi ng to commission 2,994 MW in FY’ 27. Apart from that, we have 1,190 MW of solar assets a lso, which are going to be commissioned in the current fiscal. So, altogether, if you look at the hydro regulated equity by end of FY'27, it would be Rs. 30,672 Crore.

Okay. Got it. My second question is in terms of what kind of construction cost increase are we seeing? Do we have a methodology that we can pass on the cost or this will just increase the regulated income?

As far as this increase in construction cost is concerned, this being a cost plus , everything is allowed by CERC. Once it is beyond our control, things are all passed on. So, there is no such concern as far as this is concerned. We are having checks and balances regarding how the cost can be kept in check. Just because of certain reasons beyond our control, like geological surprises, sometimes there are design changes and other ev ents happen in the project site , definitely, there are some increase. In any case, all those increases are taken care of as per the regulations. Whatever cost beyond our control, that is definitely allowed by the CERC. So, we do not have any issues on that front.

Okay. What is the reason for a negative regulated income for this quarter?

You are talking about regulated deferral account?

Yes, regulated income.

That is basically, as we have discussed, in our opening remark, there has been reversal of Rs. 1,156 Crore of DTL in the line item of deferred tax liability. So, similar kind of reversal we have to make under rate regulated asset also. That has been reflected under regulated deferral account. That impact is there basically. This we have disclosed in note #8 of our financial results. That is taking care of this concern.

Right. With the Subansiri all the three units functioning and Parbati also coming and Teesta-V, what is the kind of volume number which we would see for the next year, if you could help us?

So, as of now, four units have already been commissioned. The design energy of this project is 7,421 million units. Going forward, more four units are coming in a phased manner. If you look at the expected generation of Subansiri Lower, we are expecting somewhere 5,000 million units to 5,500 million units of generation from Subansiri Lower.

This is incremental for FY'27, right?

This is expected generation from Subansiri Lower, not incremental. We have seen generation of 506 million units in Subansiri Lower during the last fiscal.

Got it. Thank you so much. That is it.

We have next question from the line of Akash Mehta from Canara HSBC Life. Please go ahead.

Hi, sir. Thanks for taking my question. Can you just help us again with the timeline in terms of the CERC tariffs that you have mentioned for Parbati and Subansiri both? If everything goes well, from when can we see the recognition of revenue at 100% for both of them?

Akash, as I already explained, Parbati-II petition is in the final stage of hearing and we are expecting an order from CERC by 30th of June.

Once the order comes, after that you said that you will take around few months after which you can recognize it or immediately from the quarter?

No. As far as recognition is concerned, in case the order comes within a quarter, then we will definitely account for the differential revenue along with interest component also, because the interest is allowed from the date of COD. In that case, we will completely be billing, part billing will be over and we will be recognizing the revenue in this quarter itself if the order comes. As far as recognition is concerned, there is no deferral.

Sure. Similarly, for Subansiri, you said after five to six months we could expect?

For Subansiri, we have already filed the petition for our interim tariff. So, first, we are just waiting how much interim tariff CERC is going to allow us and thereafter, in subsequent hearings, like in case of Parbati -II, after interim we are expecting that within three to four months. But in case of Subansiri, as this is a very old project, so we expect that not more than six months CERC will take to issue the final order. In that case, we will be having a fair idea of where we are landing in terms of revenue. As of now, we are booking 80% of the revenue of the AFC as per tariff petition which we have filed.

This Subansiri, it will be for the entire capacity, right, that whatever?

For Subansiri, we have filed for three units which were commissioned and as the units adds on, we will be filing supplementary tariff petitions with CERC. We will keep on updating. CERC will be allowing us on projected basis also. But, once all the units are complete, the final petition will be filed at that point of time. But, in that case, CERC will be allowing us interim tariff for billing purpose also.

For the three units once the final order comes through, then you can start recognizing it for Subansiri, right?

Yes.

Okay. Just the second question, are there anything else in terms of the future projects other than, I mean, Pakal Dul or Kiru or any other project where you are seeing cost escalation where something similar could kind of happen?

Akash, cost esc alation in hydro projects are very inherent. You cannot rule out. Even though if there is no time overrun, there will be cost overrun. Because when we award at a particular price level, that award cost is not freezed. That is basically at a particular pric e level. So, if you are going forward with that award for four, five, six years, we have to pay the price variation. So, cost overrun is very inherent in any hydropower project. Now if any time overrun is there, that can also lead to cost overrun. So, that varies project-to-project. It is not necessary that every project will have their time overrun. There are many projects which we have commissioned in past ahead of schedule also. So, it is not that every project will see its time overrun. It depends. And accordingly, based on the two broad factor as we have discussed - beyond the control of the management and within the control of the management, based on which CERC allows the cost overrun.

Sure. That is helpful. Any of the future projects are facing material changes in cost or it is not that much?

Not material because projects like Pakal Dul, Kiru, Kwar are doing pretty well and whatever timeline we have shared with you, we are going to commission these projects by that timeline. So, nothing extraordinary you will find there.

Okay, that is quite helpful. Thanks a lot.

We have next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.

Thank you for the opportunity once again. My first question, what led to profit for Subansiri in the quarter, given that the PAF and generation is lower in the quarter, and also you are booking at lower tariff, right? Have you booked any shortfall in generation in Subansiri also?

No. Mohit, we need to understand that whatever AFC of any project we file, that is basically based on the capital cost of the project. If we are going to the CERC with the original cost of the project without any deduction and then whatever expected AFC is there from that particular project, 506 million units of generation we have from Subansiri in the last fiscal, so their income has been booked corresponding to the capital cost of these units which we have commissioned . If you are taking the entire capital cost of those units, for example, if we have commissioned three units of Subansiri, their corresponding capital cost is coming around Rs, 20,000-odd Crore. If you take tariff based on Rs. 20,000 Crore of capital cost and if you multiply the number of units generated, then certainly this is the top line, and apart from that, whatever actual expenditure has been there, after that you are going to have profit. If any cut is there in the top line and expenditure are coming 100%, then only you wi ll look at some losses and everything. But if revenue and expenditure both are compa tible to each other in line with the AFC component, why any loss would come?

This is my question, because we are looking at a much lower tariff, that is the reason I am asking.

So, we have not taken any much lower tariff. The only thing we have done 80% of the AFC, and there if you gross it up, then Rs. 150 Crore of under-recovery we have seen in Subansiri Lower, which we have discussed.

Understood. My second question, why shortfall in generation has been booked in Parbati-II? Are we going to argue for lower design energy for the power plant?

No, it is too early to argue for the lower design energy. Parbati has see n only one year and you have seen that some cloudburst issue and everything had incurred there in Parbati-II just one year back, early monsoon. For challenging the design energy, you have to wait for at least three years.

How can you book the shortfall in generation? Is it allowed in the regulation?

It is allowed.

Mohit, basically, shortfall in generation, regulation allows us. In case we are not able to achieve design energy and the reasons for non-achievement are beyond our control, in that case, CERC regulation allows us even to bill. So, in that case, we are having order of interim tariff of 75%. We are going to bill that too at the rate of 75% of the tariff filed. So, this is as per regulation what we are doing. There is no issue. We are going to bill and get it from the beneficiaries.

Why is that TLDP-III and TLDP-IV has shown lower PAF in the quarter. Is there any particular reason? Are they impacted by something?

If you r emember October'23 events where we got heavy damages in Teesta -V, these flash floods had impacted our TLDP-III and TLDP-IV projects also. A lot of silt issues are there, which we are trying to come out of. Last year also, we had carried out some process to remove the silt and all, but again it has accumulated. Those issues we are now basically facing and hopefully , we will be able to come out of these issues within three months I believe.

Understood. Which are the power plants you are likely to tender in this fiscal, my question is Sawalkot, Kamala, Subansiri Upper, Etalin, all these four will get tendered out this fiscal or do you think two will be this fiscal and two next fiscal?

Yes, we are also thinking from the same line and hopefully, we will be able to do it.

Actually, we have a target to bring five projects of hydro bring into construction stage during this financial year. Two have a lready been awarded, Uri -I Stage-II and Dulhasti Stage-II. Three more projects like Etalin, Sawalkot and Kamala are also likely to be brought into the construction stage during this financial year. One more PSP also, we are targeting to bring into the construction stage which is Indira Sagar-Omkareshwar.

Any update on Subansiri Upper, sir?

Subansiri Upper, we may not be going this year. Next year , we may be going for that.

Understood, sir. Thank you for answering.

We have next question from the line of Murtaza from Kotak. Please go ahead.

Hi, sir. Just wanted to reconfirm, when you talked about Parbati-II doing a full year profit of Rs. 150 Crore is it not that very less against the regulated equity and project cost of Parbati-II like taking Rs. 150 Crore as the normalized profit? That is number one. Number two on Subansiri Lower, when you talked about that 80% revenue, given that you only part commissioned the capacity, you are well within the 80% and therefore you are booking the whole revenue for these early units, is that understanding correct?

Let me take your question first for Parbati-II. As we have shared that the revenue which we have recognized to Parbati -II is Rs. 1,320 Crore. The design energy of Parbati-II is 3,125 million units, whereas we have actually generated 1,642 million units in FY'26. If your generation is not there, you have not been able to book the entire expected revenue of Parbati-II. That is the reason you have not achieved the expected PAT level of Parbati-II.

It is only half the generation?

Yes. We have shared earlier also that in Parbati-II there was some cloudburst issue in June last year . So, that has basically stopped the expected gen eration of Parbati-II. If I take your question for Subansiri Lower, we have shared that 80% of the revenue we have recognized i.e. around Rs. 613 Crore only. Total revenue against the 506 million units is Rs. 613 Crore only. That is 80% of the expected AFC. If you gross it up, you will find Rs. 150 Crore under-recovery in Subansiri Lower also.

Two things. One is the actual generation is still much lower than the design energy, therefore the revenue is low and then it is at 80% of that, so even low er. Fair enough.

Exactly.

Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Rupesh Sankhe for closing comments.

We thank the NHPC management for giving us an opportunity to host this call and we also thank all the investors and the analysts for joining this call.

On behalf of NHPC, I would like to convey my thanks. Thank you so much all the investors.

Ladies and gentlemen, on behalf of Elara Securities (India) Private Limited, that concludes this conference. Thank you for joining us, and you may disconnect your lines.