NHPC Limited, India’s largest hydropower producer, delivered a strong top-line performance in the first quarter of FY26 but saw moderate bottom-line growth on a consolidated basis. The company reported:
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Revenue from Operations: ₹3,213.77 crore, up 19.28% YoY.
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Profit After Tax (PAT): ₹1,065.02 crore, up 4.23% YoY.
While revenue growth was robust, driven by higher generation and improved power sales, standalone profitability contracted, pointing to cost pressures or changes in operational efficiency.
1. Financial Performance Overview
Consolidated Q1 FY26 vs Q1 FY25
| Particulars | Q1 FY26 (₹ Cr) | Q1 FY25 (₹ Cr) | Change (%) |
|---|---|---|---|
| Revenue from Operations | 3,213.77 | 2,694.20 | +19.28% |
| Profit Before Tax (PBT) | 2,030.50 | 1,953.19 | +3.96% |
| Profit After Tax (PAT) | 1,065.02 | 1,021.77 | +4.23% |
Key Observations:
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Double-digit revenue growth driven by higher hydropower output and possibly better tariffs.
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PBT and PAT growth in low single digits suggests higher operating expenses or increased finance costs.
Standalone Q1 FY26 vs Q1 FY25
| Particulars | Q1 FY26 (₹ Cr) | Q1 FY25 (₹ Cr) | Change (%) |
|---|---|---|---|
| Revenue from Operations | 2,977.43 | 2,416.12 | +23.23% |
| Profit Before Tax (PBT) | 1,900.96 | 1,778.41 | +6.90% |
| Profit After Tax (PAT) | 914.82 | 960.00 | -4.71% |
Key Observations:
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Standalone revenue growth outpaces consolidated, indicating core generation activities performed strongly.
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Standalone PAT decline despite revenue surge could be due to higher depreciation, maintenance, or interest costs.
2. Revenue Drivers
NHPC’s revenue is primarily derived from:
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Sale of Hydropower – Long-term PPAs with state distribution companies.
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Trading of Power – Short-term market sales when surplus is available.
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Consultancy & Services – EPC and design services for other hydro projects.
Likely Q1 FY26 revenue catalysts:
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Improved water inflows boosting plant load factors (PLF).
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Timely commissioning of capacity additions in the previous fiscal.
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Seasonal demand surge during summer months.
3. Profitability and Margins
Consolidated PAT Margin: 33.14% in Q1 FY26 vs 37.93% in Q1 FY25 — margin contraction.
Standalone PAT Margin: 30.71% in Q1 FY26 vs 39.73% in Q1 FY25 — sharper decline.
Possible margin impact factors:
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Higher repair and maintenance expenses post-commissioning of new assets.
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Increased finance costs from project funding.
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Lower other income compared to last year.
4. Year-on-Year Trends
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Revenue growth rate (19.28%) far exceeds average power sector growth, showing NHPC’s scale advantage.
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PAT growth slowed sharply from prior years, indicating cost-side headwinds.
5. Share Price Performance and Market Reaction
13 Aug 2025 Trading:
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Opening Price: ₹84.49
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Current Price: ₹84.99 (up ~0.59% intraday).
Long-term returns:
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1-Year: -10.66% (underperformance due to sector weakness).
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5-Year: +311.62% (quadrupling of investor wealth).
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All-time: +141.02% (steady wealth creation over decades).
The modest uptick in share price post-results suggests that while the revenue growth impressed, investors remain cautious about margin pressures.
6. Industry Context
Key sector drivers:
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Renewable Energy Push: Hydropower remains critical for grid stability alongside solar and wind.
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Government Support: Policy incentives for large hydro and pumped storage projects.
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Monsoon Dependency: Seasonal variability in water flows can impact quarterly results.
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Tariff Regulation: Regulated returns create stability but cap upside.
7. Risk Factors
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Seasonal and climatic variability impacting power generation.
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Counterparty risk from financially stressed state discoms.
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Project delays due to environmental clearances or land acquisition issues.
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Fluctuations in interest rates affecting financing costs.
8. Strategic Outlook for FY26
NHPC’s strategic priorities likely include:
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Expanding capacity via greenfield hydro and pumped storage projects.
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Diversifying into solar and wind to balance seasonal hydro generation.
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Enhancing efficiency at existing plants to maintain PLF.
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Leveraging government support for renewable integration.
Base case outlook: High single-digit profit growth for FY26 with double-digit revenue growth if water inflows remain favourable.
Conclusion
NHPC’s Q1 FY26 shows impressive top-line expansion but pressure on profitability. The strong revenue growth highlights operational capacity and demand strength, but declining margins—especially on a standalone basis—signal rising costs.
For investors, the key watchpoints will be cost management and execution of upcoming projects. Sustaining high revenue growth while regaining margin strength will determine whether NHPC delivers superior returns in FY26.
