NHPC Ltd

- NHPC has sufficient equity available, ranging between Rs. 2,500 to Rs. 3,000 Crore, even after loan repayments and dividend distributions, so is comfortable with equity contribution for upcoming projects. - Funding pattern for projects follows 70% debt and 30% internal accruals (equity). - Loans are being raised at competitive rates, e.g., Rs. 2,000 Crore at 7.54% interest with flexibility for prepayment without charges. - NHPC has no issues with financing; complete loan tie-ups are in place. - Equity contribution for subsidiary projects is largely complete (e.g., 100% equity in Teesta-VI, Rangit-IV, Pakal Dul, Kiru). - No explicit mention of planned equity dilution; management indicates comfort with internal equity for ongoing and pipeline projects. - Overall, no current plans to raise fresh equity; debt fundraising at favorable terms is ongoing to support capex.

- Current average capex is in the range of Rs. 8,000 to Rs. 10,000 Crore on a consolidated basis. - NHPC has fully contributed equity in subsidiaries like Teesta-VI, Rangit-IV, Pakal Dul, and Kiru; minimal further equity needed in these. - No significant equity dilution expected; NHPC is comfortable funding equity from internal accruals. - Several pump hydro storage (PHS) projects are planned through MoUs with states: - Maharashtra: 4 PHS projects totaling 7,350 MW under development. - Odisha: At least 2,000 MW PHS and 1,000+ MW renewable projects planned. - Andhra Pradesh: 2,000 MW PHS projects in joint venture mode; 950 MW Kamlapadu and 1,000 MW Yaganti in phase one. - NHPC continues selective renewable energy projects (solar, wind) maintaining a minimum 12% ROE threshold.

- NHPC plans commissioning of significant hydro capacity in coming years: - 500 MW (Subansiri Lower Project) by March 2024 (revenue recognition from next year). - Around 2,500 MW expected by March 2025, including Parbati-II (800 MW), Rangit-IV (120 MW), and multiple Subansiri units (1,500 MW). - Renewable energy portfolio under construction includes 1,000 MW solar, and projects in subsidiaries totaling over 350 MW, plus a recently won 200 MW solar bid in Gujarat. - NHPC maintains focus on hydro but will undertake solar/wind projects targeting a minimum 12% RoE. - Generation volume for Q2 FY24 was 9,010 million units, down 11% YoY due to water availability and weather events; future volumes depend on hydrological conditions. - Incentive income recognition is deferred to second half, linked to actual plant availability factor (PAF), impacting revenue timing. - Overall, steady growth expected driven by capacity additions, subject to hydrological variability and regulatory realizations.

- NHPC's future earnings growth is influenced by its substantial project pipeline, including hydro and pump hydro storage projects, with comfortable equity availability (~Rs. 2,500 to 3,000 Crore). - Return on equity (ROE) for hydro projects, including the JV pump hydro storage with Andhra Pradesh, is expected at 16.5%. - Generation depends on water availability; despite recent La Nina conditions reducing generation by ~8%, NHPC can claim shortfall per CERC regulations, insulating base returns around 16.5%. - Incentive income recognition changes may impact reported earnings timing, with incentives likely accruing in the second half of fiscal years. - Cost of equity is estimated at approximately 12%, supporting project financing without substantial equity dilution. - Insurance covers unforeseen losses (e.g., Teesta basin flood), mitigating impact on profits. - NHPC maintains low-cost funding (loans at ~7.54%) and passes through cost escalations in tariffs, supporting stable profitability.

- NHPC has several ongoing and planned projects, including major hydroelectric power projects like Subansiri Lower Project, Parbati-II, Rangit-IV, and Dibang Multipurpose Project. - Subansiri Lower Project: Active construction; commissioning of two units expected by Q4 FY24; remaining units by May 2025. - Parbati-II Project: Targeted completion by September 2024. - Dibang Multipurpose Project: Several packages awarded; remaining packages to be awarded in current financial year. - New MoUs signed with Odisha and Andhra Pradesh for development of pump storage projects and renewable energy, with plans for 2,000+ MW pump storage in both states and 1,000+ MW renewable energy projects in Odisha. - NHPC’s renewable portfolio includes under-construction projects: 1,000 MW solar at NHPC, 65 MW at Bundelkhand Saur Urja Ltd, 88 MW at NHDC, and recently won 200 MW solar project in Gujarat. - Overall, NHPC’s orderbook involves multi-gigawatt hydro projects under various stages of execution and planning.