Detailed Narrative
Strong 9M FY26 Performance Driven by Capacity Additions
NHPC reported a robust 9M FY26, with power generation increasing by 15% to 25,849 MUs and revenue from operations growing 10% to Rs. 8,800 Crore. Profit After Tax (PAT) also saw a 7% rise to Rs. 2,306 Crore. This growth was primarily attributed to the commissioning of the 800 MW Parbati-II Power Station and increased generation from Parbati-III, alongside the recent commissioning of two units (500 MW) of the 2000 MW Subansiri Lower Project and the 300 MW Karnisar Solar Project.
Aggressive Capacity Expansion Across Hydro, Solar, and PSPs
The company is pursuing an ambitious growth strategy, planning to add 2100 MW of capacity by March 2026 and another 2744 MW from hydro in FY27. Beyond this, NHPC aims to start 5-6 new hydro projects totaling approximately 10,000 MW in 2026 and commission over 1000 MW of solar power within the current calendar year. Additionally, it plans to commence construction on at least two Pumped Storage Plants (PSPs) with a combined capacity of over 2000 MW in 2026, targeting a generation cost of Rs. 4.50/unit and total cost of Rs. 7.00/unit for PSPs.
Significant Capex Outlays for Future Growth
NHPC's capital expenditure for 9M FY26 stood at Rs. 8,844 Crore, a 19.4% increase YoY. The company has outlined a Capex plan of Rs. 13,300 Crore for FY26, which is set to increase to Rs. 15,000 Crore in FY27. Thereafter, annual Capex is projected to be in the range of Rs. 12,000-13,000 Crore, underscoring the substantial investment required for its extensive project pipeline across hydro, solar, and pumped storage technologies.
Conservative Revenue Recognition for New Projects
For newly commissioned projects like Parbati-II and Subansiri Lower, NHPC is conservatively recognizing only 80% of the estimated revenue until the Central Electricity Regulatory Commission (CERC) issues its final tariff order. This practice resulted in approximately Rs. 225 Crore of revenue from Parbati-II not being recognized in 9M FY26. Management expressed confidence that CERC would approve the full tariff, including cost overruns beyond the company's control, with the final order for Parbati-II expected within 5-6 months.
Challenges in Solar PPA Signing and Evolving Market Dynamics
While NHPC is expanding its solar portfolio, management highlighted difficulties in signing Power Purchase Agreements (PPAs) for new solar projects. Key hindrances include grid connectivity issues, with infrastructure often available only by 2029-30, and a shift in DISCOM preferences towards 24-hour Round-The-Clock (RTC) or hybrid power solutions (solar with battery, or solar-wind-battery) rather than standalone solar. Despite these challenges, NHPC is hopeful of signing PPAs for 2,000-3,000 MW of solar capacity in the next 2-3 months.
Project Execution Progress and Favorable Geological Outlook
Major projects are progressing, with the dam tender for the 2880 MW Dibang Hydroelectric Project expected to be awarded in February 2026. The 849 MW Teesta-VI project, acquired through NCLT, has achieved 71% physical progress despite geological issues in its Head Race Tunnel, targeting 2029 commissioning. Management reassured that geological conditions for upcoming large projects like Upper/Middle Subansiri and Etalin are significantly better than those encountered in Lower Subansiri, reducing the risk of similar delays.