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National HydroPower Corporation – Review

September 16, 2008

We are posting a fundamental review on National HydroPower Corporation Ltd ahead of its planned IPO.

NHPC’s current capacity is 5,170MW and plans to add 5,320MW in the 11th plan, of which 1,030MW has already been commissioned. NHPC plans to further add 13,360MW in the 12th plan. The company generated 14,813mn units in FY08 and recorded a turnover of Rs23bn and net profit of Rs10bn. Total assets as on March 31, 2008 were Rs285bn and net worth was Rs175bn.

NHPC plans to raise Rs16.8bn through a proposed IPO (10% fresh equity issue, 5% stake sale by GOI) – to part finance its planned outlay of Rs146bn in the 11th plan. Vast untapped potential in the Hydro power generation space gives strong growth opportunities – installed capacity of only 35.9GW against an assessed potential of 148.7GW.

NHPC has prepared pre-feasibility reports (PFR) for 43 projects with an aggregate capacity of 19.3GW out of the 78 projects (with an aggregate capacity of 34GW) identified by the government for implementation on a priority basis – targeted to be completed by 2017.

The Hydro Power Policy 2008 allows developers to recover additional cost of providing free power through merchant sale of up to 40% of the saleable energy. This is expected to attract larger private sector players in the sector and lead to higher returns for all developers, including NHPC.

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