NHPC Limited analyst Q&A

Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Ragini Pande from Elara Capital. Please go ahead.

Thank you for taking my question. So, I just want to know your CAPEX guidance for FY'27 and FY'28 and if you can just repeat the CAPEX that you have incurred for FY'26?

CAPEX for Nine Months FY'26 is Rs. 8,844 Crore as against Rs. 7,405 Crore in the corresponding period of previous year on consolidated basis.

Thank you, sir. Now, while you told about the project pipeline for future years, can you just tell the total capacity addition which you intend to do for FY'27 and FY'28 bifurcated between hydro and renewable and for the current year as well? Just the total capacity addition number.

In the current year, we have already added 1350 MW till December’25. In February’26, we have added one more unit of Subansiri (250 MW) and two more units are also going to be added. So, by the end of March ’26, we are going to add additional capac ity of 2100 MW. Next year, our capacity addition will be 2744 MW from hydro.

Okay and on the renewables?

Renewable as CMD sir has shared with you that currently our solar capacity under construction is 1,190 MW and most of the solar capacity , we are planning to add by end of next financial year.

Yes, okay. Thank you. On the generation front, in Q3 FY'26, I can see that the generation is increased by 23%, but for Q3 on the revenue, I can see a decline of 3%. So, any reason for this deviation?

Yes, as DF sir has already shared with you while sharing the variance in the line item that during Q3 of the corresponding period, we ha d a one-off revenue to the extent of Rs. 500 Crore, on account of pay anomalies and interest on arbitration. So, if you exclude Rs. 500 Crore from the previous year, then you will find that our Revenue is higher than the corresponding period.

Okay and sir, any under-recoveries you have currently?

No, not at all. We are going fine with normative ones.

And on the secondary energy front, I can see that the secondary energy incentive has almost doubled. Can you just throw some light on the reasons for this?

Yes, this is due to better generation by our subsidiary, NHDC. The design energy of NHDC has already been achieved. So, whatever incremental generation we are getting, we are accounting as secondary energy. So, there is increase of Rs. 123 Crore in our quarterly total incentive.

Lastly, on the pump storage projects front, I just wanted to know what is the project pipeline and when can we see the construction begin and when can we expect the first commissioning to take place? Also, on the cost economics front, what kind of a CAPEX you foresee for these projects and what is the realization of the revenue potential for these projects?

I think CMD sir may like to answer this question.

Yes, Saroj. Ragini, I told earlier also, most of the PSP projects are under DPR stage as of now and as you rightly said, we need to have viable projects only. So, we are looking at viable projects. As per the preliminary analysis we have done based on the PFR, Omkareshwar PSP in Madhya Pradesh (640 MW ) seems to be attractive one. Then there is Savitri PSP, Kalu PSP in Maharashtra and one project in Odisha also, which is Masinta (1,000 MW). So, total capacity of these projects comes out to be around 5500- 6000 MW. Once the DPR is finalized, we need to get approval of the Central Electricity Authority also on both the fronts, technical feasibility as well as financial viability. So, we are planning to start at least two projects of around 2,000 MW out of these four during this calendar year and I am 100% sure whatever projects we will start, they will be very attractive one with generation cost of around Rs. 4.50/ - per unit and total cost including pump, that will be around Rs. 7.00/ - per unit. Considering the requirement of the storage which is mainly from two sources only, either battery energy storage or pump storage plants only. So, considering this addition of solar in the grid, we definitely require the storage power and I think whatever we generate, I am 100% sure that we will be very easily able to sell that with beneficiaries who have a solar power in their portfolio.

Thank you, sir. I will get back in the queue.

Thank you. The next question is from the line of Murtuza Arsiwalla from Kotak Securities. Please go ahead.

Hi, sir. I just want to check we commissioned Parbati in this year and Subansiri a couple of units as well. Are we accounting for the revenues based on the revised cost? Or there is some under-accounting of revenues till we get a formal order for the revised cost approval? So, is there some under -recovery because of which we are not seeing the full benefits in the earnings? That is the first one. Second, during the quarter, there were certain trans mission charges associated with Subansiri which are recoverable, which were accounted. We want to know if that is for the entire 2,000 MW or it's only for the units which have been commissioned and so you would have more such sort of transmission charges which should come.

Yes. Mr. Murtuza, coming back to your first question regarding revenue recognition in Parbati-II, we have already filed tariff petition based on the revised cost of Parbati - II, Rs. 13,600 Crore and based on that, whatever estimated tariff we have envisaged, we have been accounting 80% of that as revenue in our Q1, Q2 and Q3 accounts. Now, for example, till December’25 for 9 months, we have already accounted Rs. 900 Crore revenue from Parbati-II which is 80% of the estimated revenue. If you gross up it, you will arrive at Rs. 1,125 Crore. So, almost Rs. 225 Cr ore has not been considered as revenue and that will be accounted after the tariff notification by CERC. So, that is the accounting treatment we are giving to Parbati -II generation and revenue. Am I clear? Anything related to Parbati-II?

Absolutely. So, should we just, if we want to annualize that Parbati, should it be like a Rs. 1,200 Crore number or given the seasonality in generation, that number wo uld be sort of lower for the 4th Quarter?

Yes, absolutely. N ow, we have already received the interim order for Parbati -II. So, we will continue to account 80% of the revenue till the final tariff notification by CERC in respect of Parbati -II and that accounting treatment would be even continued in Q4 also.

Okay a nd has similar treatment in the case of Subansiri, could you give us what Subansiri would look like in 80 versus 100?

Yes, same treatment, same policy in case of Subansiri also. We will be filing tariff petition in respect of Subansiri, likely to be in the first week of March’26 and then 80% of the estimated revenue will be accounted till the final notification by CERC. So, we will be taking same policy in case of SLP also.

So, would it be fair to say that because 20% is a fairly large amount set aside when one considers the equity contribution, that till you get the final order, while it's not a drag on earnings, it's not actually contributing to profit, because 20% of revenue is where the profit of Parbati and Subansiri would lie?

In that sense, you are absolutely right, because we will be taking 100% expenses and 80% of the revenue. So, our profit will not be reflected in true manner. But fact remains that, this is the practice, because being conservative in accounting, we never take 100% of the revenue, as CERC is the final authority. And once they notify the tariff for any project, then only we should consider 100% revenue for that.

For Parbati-II, we are expecting within 5 to 6 months.

Okay. And Subansiri?

For Subansiri, we are going to file tariff petition by first week of March. So, interim tariff will be expecting very soon, maybe within 2 months. And then final tariff petition based on the final commissioning of the Subansiri.

Which will be when the last unit gets commissioned. Then you will file the final tariff petition and then depending on how much time the regulator takes, accordingly, you will get better recovery?

Absolutely.

Okay. Any reason to believe, given that these projects are high tariff and substantially delayed, t hat the regulator may ask you to consider some concessions, that, okay, instead of 80% you account for 90% right now and we will reduce some amount of a back-ended revenue and profile in these projects?

Yes. So, 90% of the revenue is one way to consider it. As I told you that Parbati-II and Subansiri both have taken exceptional time in commissioning. 20 -25 years kind of timeline has been there. So, we are just taking conservative view. Let CERC decide the final tariff and accordingly, that amount is going to our P&L sooner or later. So, it is just timing difference, Mr. Murtuzaji.

Sure. And just on the second one, which is on that tariff charge raised into Subansiri, which is again a recoverable, just getting a sense that Rs. 800 Crore number is for the entire 2,000 MW or as more capacities get commissioned, you will recognize the remaining also?

Power Grid had commissioned its assets in March ’23 and March ’24. So, from that date, whatever Rs. 781 Crore has been calculated, that is up to December’25. Now, in incremental order, we are going to add our unit one by one. So, that amount would be decreasing as by March, we ar e going to add four units. So, ATC will be on balance four units. So, in decremental order , it would be coming. But Rs. 781 Crore is not the final figure. Some amount will come from ATC in next financial also, b ut not to that extent.

Our pleasure.

Thank you. The next question is from the line of Prashant Kshirsagar from Unived Corporate Research Private Limited. Please go ahead.

I just wanted to ask about Subansiri Lower Hydroelectric Project. What is the levelized tariff finalized for?

So, considering Rs. 28,000 Crore of CAPEX, the levelized tariff is around Rs. 7.50/ - per unit.

And will you be able to pass it on to the states or how, because they will be slightly reluctant to absorb. Or you will be getting some concessions from the Government in terms of period of the project?

Prashantji, you have been tracking NHPC for more than 15 years and we are in regular touch. So, you have seen what the reasons for the delay in Subansiri Lower were . All these delays were beyond the control of the management and CERC is very much clear in their regulation that any cost overrun beyond the control of the management shall be part of the capital cost for tariff determ ination. So, we are very much sure that whatever tariff and whatever cost we are going with to CERC , they will consider definitely. Our Director (Finance) also wants to add something in this regard.

Yes, as far as PPAs are concerned, all the PPAs are in place. So, we don't find any problem because once CERC determines the tariff, we will be getting all the tariff determined by CERC. So, we don't find any issue as of now as far as this tariff acceptance by the beneficiaries is concerned.

But sir, do you think CERC will go for Rs. 7.50/ - or they will slightly give you some concessions?

Yes, I got your point. CERC goes as per CERC regulations and in the regulations, it is clearly defined that whenever any expenditure has been incurred, which is beyond the control of the company, in that case, it is allowed by the regulator. So, in this case, all the instances as Mr. Saroj has explained, are beyond the control of th e company. So, in all probability, CERC is going to allow that. We are pretty much sure about it. The petition which we are going to file, we are going to put up these facts very strongly so that there are very less chances of any sort of disallowance of any expenditure from CERC side. We are confident about it and we will take up the tariff petition very strongly.

I think Mr. Saroj and Director (Finance) have already explained the things regarding the high tariff. We all know that the reas ons which were beyond the control of the management as well as the company for which the project sta lled almost for 9 years and that fact is known to all the stakeholders including CERC also. As per the PPA, all the beneficiaries are already honoring that. Considering the power for 25 years, Rs. 7.50/- is not a very high tariff. It is a peaking power as well as the clean power . We had discussions internally as well as with other stakeholders and we do not foresee any deduction from the CERC side on the cost which we have incurred or which we have projected in our petition.

Okay, sir. Second question is on the Dibang Hydroelectric Project . In the opening remarks, sir, you said that one tender is pending. So, it is regarding which contract because in the earlier conference call, they had said about the dam tender was pending. So, can you help us with that?

Dam tender is pending but just want to share a good news. Today only, we opened the price bid and we are going to award this contract within this month only. With this, all the contracts will stand awarded and I am hopeful that the way the project is progressing, we are not looking back. The dam package which you were talking about was there in the last call. The same is in this call also which I just told you but today only, we opened the bids and during this month, we will award that also.

So, this month you will be awarding that . Okay and just for the information, sir, how many players have bided for this dam?

Four bidders were there in this.

Four players, okay and the third question is about the Etalin Hydroelectric Project. You have been assigned the project from SJVN by the Power Ministry. So, just wanted to ask you whether this project will come in your balance sheet or it will rem ain in the SJVN's balance sheet, what is the understanding now?

No, now this will be in the balance sheet of NHPC only. Due to some reasons like the size of the project and also our presence in the Dibang Valley already as this is in the Dibang Basin only, Ministry of Power decided that we can handle this in a much better manner. That was the only reason. So, now this w ill remain in the balance sheet of NHPC only.

No, we will be reimbursing them based on t heir balance sheet because that is also a Navratna PSU and so , we will be definitely reimbursing that amount whatev er they have incurred and main expenditure on the plant i s basically of the land procurement only. That is the main expenditure on this project as of now.

Okay. Sir, the other questions on the projects of Kamala and Upper Subansiri, the land acquisition has been done or is it in the process now?

For Kamala, we are in v ery advanced stages and the property survey and everything has already happened and now , only the award has to come from the district administration. But due to some Panchayat election, it got slightly delayed. But now , we are expecting this award anytime for Kamala, which we call Middle Subansiri also (1720MW). I just want to share with you that the PIB has already cleared this project. So, I hope that by the end of March, we will be having all the clearances including the land part also and we will be awarding the contract in April or May and start the construction accordingly.

And so, you expect it to start in FY'27 by any chance?

Yes. After April, it can be started anytime because we have already tendered out one package for Kamala and I told you that PIB is already cleared. Some of our Environment Clearance , Forest Clearances and the Land Acquisition are in the last stage of approval. So, I am expecting that we will get all the approvals and clearances by the end of March a nd from May or maximum June onwards depending upon tenders. Sometimes, tenders get delayed due to one or the other reason of the bidders. If it doesn't happen, then I think we may conclude the tendering process of at least one package by April itself. So, from May onwards , the construction may get start in the Kamala Project. Upper Subansiri, you just talked about, I think there may be a gap of around 4 to 5 months between the Middle Subansiri (Kamala) and Upper Subansiri. There also, we have property surveys going on and we are in advanced stage of Forest Clearance. We may get Environment Clearance also by April or May. So, there will be a gap of 4 to 5 months between Middle Subansiri and Upper Subansiri for construction start.

And for Etalin, when should one expect FY'27 or FY'28?

We will start the construction of Etalin from July or August.

Because everything is in place. Environment Clearance (EC) is in place, Forest Clearance (FC) is in place and almost 90% land acquisition has been done. Only 10% is remaining. Now, only 2 -3 days back, Honorable CM along with the Cabinet had a meeting there in Etalin. Some small issues which we are just facing at site, those will be resolved very soon and I am expecting that we may start the construction of Etalin also by June or July.

Okay, sir. And last question is regarding the terrain. Sir, you had experienced terrain, geological issues and various issues in Lower Subansiri. So, in case of Upper Subansiri and Middle Subansiri, that's Kamala, you expect that sort of hindrance to the project or it will be smooth kind of thing?

No, terrain is definitely very good there and better than Lower Subansiri. So, we don't expect much of issue whic h we faced in Lower Subansiri because the geological conditions are much better in these projects including Etalin also.

Also in the Dibang Valley also, you feel the terrain is much better than?

Dibang is much better. Now, I just want to tell you, in the powerhouse, which is underground cavern basically, w e are pro gressing very well and we are in very advanced stage of excavation, which is a major critical component of any hydro project. Also the diversion tunnel portio n, there are six diversion tunnels and we are almost at the fag end of completing those diversion tunnels. So, it shows itself that the geology is much better. Now the dam package will also be awarded, so once we start that, then definitely we will come to the exact geology of the dam. But as per our investigation and geological surveys, the geology is very good in that area and we don't foresee any issue or any delays because of these accounts. You can understand that we can never avoid any surprise . But a s per our investigation, we don't foresee much surprises in that area.

Thank you. The next question is from the line of Rupesh Sankhe from Elara Capital. Please go ahead.

Sir, do you have Adjusted PAT number for Q3?

Yes, Rupesh. So, while arriving at Adjusted PAT, you have to add just Rs. 116 Crore loss given by Parbati-II. So, whatever reported number of PAT of Q3 is there, you just add Rs. 116 Crore, you will arrive at Adjusted PAT because there is no any exceptional or one-off item in this quarter.

Okay. The second question is, Sir, as a nodal agency, we have many projects on the solar side where PPA and PSA are yet to be signed. So, how is the progress there?

Regarding this REIA, I think you are talking about.

Yes, absolutely.

So, in that case, you know that the demand has slightly dried down in the RE sector across the India in fact. All the REIAs are trying their best to do the PPAs. But recently we got a very good response for our 2 -3 recently awarded renewable energy contract, which is mainly FDRE. And for wind also, we are getting a very good response. We got a mandate of 1,200 MW from Punjab. We got almost 15 bidders in that. As you know that we have almost bid out around 20,000 MW. And out of that, we have done the PPA only for 6,000 MW as of now. So, recently, all the RE developers have done 2 or 3 rounds of meetings with MNRE, Ministry of Power. One meeting was chaired by Honorable Power Minister as well as Honorable MNRE Minister and they have told their issues in that forum. Some of them are definitely resolvable a nd they were sure to come out positively how we expedite the PPAs or PSAs to be signed as early as possible. But ultimately, this has to be signed by the ultimate user or beneficiaries and those are the distribution companies. So, there is some mismatch of adequacy plan, as well as the demand, as well as the power which is available as of now. Majorly 2-3 hindrances are there for PPA s. One is the connectivity issue, because connectivity which are now available are coming in 2029-30. So, Discoms are slightly hesitant to sign the PPA when the power will be available after 2 -3 years and there is a source of power. Discoms are now planning that they will not sign the PPA for like standalone solar. And they want that solar with the battery or some other alternative like solar plus wind plus battery, because they want now 24 -hour round the clock (RTC) supply or they want assured peak. So, because of this now change in requirement, some of the PPAs are definitely getting stuck up. But I am still hopeful that in next 2 to 3 months, we may sign PPA of around 2,000 to 3,000 MW also.

Yes. Thank you, sir.

Thank you. Ladies and gentlemen, that was the last question for the day. And now, I would like to hand over the conference to the management for closing comments.

I think we really had a very good conversation with our friends and I really appreciate the queries which they have raised because whenever we had conversation, we learn a lot from our stakeholders, what are the short comings we have and how to fulfill those shortcomings. So, I really thank Elara Securities as well as all querists who have joined through this call. I really thank all of you and I assure everyone that NHPC has a bright future in terms of completion of the project which are under construction, in terms of expansion, the new projects which are coming up, whether these are in hy dro sector, whether these are in pump storage sector, whether these are in RE sector. We are trying to see how we can have some inorganic or organic growth, whatever possible. So, that also we are working upon and I assure everyone that our results of this entire 12 months will be very good and we will have a much better year this year. Thank you so much.

Thank you. On behalf of Elara Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.