1. The Geoeconomic Thesis: Hydro as India’s “Green Baseload”
When people talk about India’s energy transition, the discussion usually jumps straight to solar panels and wind turbines. What often gets ignored is a basic truth: solar and wind cannot run a country 24×7 on their own. They are intermittent. When the sun doesn’t shine or the wind doesn’t blow, the grid still needs power. This is where hydropower becomes critical.
NHPC Ltd sits at the center of this reality. It is not just another PSU utility. NHPC is India’s largest hydropower producer and one of the few energy companies that can provide clean, renewable, round-the-clock baseload power. In a world where coal is being phased down and gas prices remain geopolitically volatile, hydropower becomes a strategic national asset.
From a national security perspective, hydropower also has a geopolitical dimension. Many of NHPC’s projects are located in border-sensitive regions like Jammu & Kashmir, Ladakh, and Arunachal Pradesh. These projects are not just about electricity generation. They are about water rights, territorial assertion, and long-term strategic presence. Large dams like Subansiri Lower, Pakal Dul, and Ratle strengthen India’s legal and physical control over river systems governed by international water treaties.
This is why NHPC should be seen as a hydro-sovereign company, not merely a power generator. In India’s journey toward its 2070 Net Zero goal, NHPC provides something no other renewable source can: stability.
NHPC OFFICIAL FINANCIAL RESULTS (PRIMARY SOURCE)
2. Q3 FY26 Financial Post-Mortem: Reading the Numbers Correctly
At first glance, NHPC’s Q3 FY26 numbers may look underwhelming to momentum investors. But a deeper look tells a very different story.
For the quarter ended December 31, 2025, NHPC reported a consolidated net profit of ₹293 crore, a decline of about 4.3% year-on-year. Revenue from operations stood at roughly ₹2,200 crore, remaining largely flat compared to last year. This was mainly due to seasonal hydel factors, as water inflows in northern river basins were lower during the quarter.
However, it would be a mistake to interpret this as operational weakness. Hydropower is inherently seasonal. Q3 is traditionally a softer quarter, especially when monsoon-fed reservoirs carry lower water levels. Despite this, NHPC maintained an EBITDA margin of around 44%, which is extremely strong for any utility business.
The company also declared an interim dividend of ₹1.40 per share, with a record date of February 10, 2026. This reinforces NHPC’s position as a yield-supporting PSU, even during heavy capex phases.
The key takeaway from Q3 FY26 is simple: profits may fluctuate quarter to quarter, but the core cash-generating ability of NHPC remains intact.
3. Fundamental Analysis: The “Safety and Yield” Equation
NHPC’s biggest strength lies in its predictability. Unlike private power producers who depend on merchant tariffs, NHPC operates under a regulated return on equity (RoE) framework. This ensures stable earnings once a project is commissioned.
At current levels, NHPC trades at a P/E ratio of around 24–25x and a price-to-book of roughly 1.9x. On the surface, this may look expensive compared to traditional PSU valuations. But this comparison misses an important point: NHPC is no longer being valued as a plain PSU. It is being re-rated as a green energy and grid-stability play.
Debt is often cited as a concern. NHPC carries total borrowings of over ₹30,000 crore, which sounds large until you consider the nature of the business. Hydropower projects require heavy upfront investment but generate predictable cash flows for 35–40 years. This is what analysts call “good debt.” Once operational, these assets pay for themselves steadily over decades.
Another important factor is dividends. Even during aggressive expansion phases, NHPC has managed to maintain a 2.4%–2.8% dividend yield. Very few growth-oriented utilities globally can offer both expansion and income at the same time.
4. The Real Growth Engine: Projects Under Construction
The future of NHPC is not in its existing plants alone, but in what is about to come online.
The 2,000 MW Subansiri Lower Hydroelectric Project in Arunachal Pradesh is the single most important catalyst. Management has guided that 5 out of 8 units (250 MW each) are expected to be commissioned by March 2026. Once fully operational, Subansiri alone can significantly lift NHPC’s earnings from FY27 onward.
NHPC is also actively diversifying beyond hydro. The company has over 1,000 MW of solar capacity under development across multiple states. This diversification is crucial because it smooths out the seasonal nature of hydropower revenues.
Another underappreciated opportunity is pumped storage projects (PSPs). These act like large-scale batteries for the grid, storing surplus renewable energy and releasing it during peak demand. As India moves toward 500 GW of non-fossil capacity, PSPs will become essential. NHPC has an early-mover advantage here, which could translate into higher margins over the next decade.
5. Risks and Geopolitical Headwinds
No long-term investment is without risks, and NHPC is no exception.
Climate variability is a real concern. Unpredictable monsoons, glacier retreat, and risks like Glacial Lake Outburst Floods (GLOFs) pose operational challenges, especially for Himalayan projects. While NHPC has robust engineering standards, climate risk is something investors must factor in.
Regulatory and environmental clearances can also delay projects. Hydropower faces stricter scrutiny compared to solar or wind, often leading to time and cost overruns. Given that many NHPC projects have gestation periods of 7–10 years, patience is essential.
Finally, geopolitical tensions in border regions can impact execution timelines. However, it is also true that these same strategic considerations make NHPC projects politically non-negotiable, ensuring long-term government backing.
6. Conclusion: A Veteran Analyst’s Verdict
NHPC’s Q3 FY26 was not a flashy quarter, and that is precisely why it matters. This was a transition quarter, not a deterioration.
The company stands at the intersection of energy security, climate policy, and geopolitics. Few listed companies can claim such relevance. While short-term earnings may remain volatile due to hydrological factors, the long-term direction is clear.
For investors, NHPC is best viewed as a “buy on dips” stock—ideal for those building a core, defensive, long-term portfolio. It offers sovereign backing, green energy exposure, predictable cash flows, and steady dividends.
Final thought:
NHPC isn’t just selling electricity. It is selling stability — to the Indian grid, to the economy, and to long-term investors.
CENTRAL ELECTRICITY AUTHORITY (CEA) – POWER DATA
❓ FAQ
Q1. What are NHPC Q3 FY26 results?
NHPC reported a consolidated net profit of ₹293 crore in Q3 FY26. Revenue remained stable, EBITDA margin stayed strong at ~44%, and an interim dividend of ₹1.40 per share was declared.
Q2. What is NHPC dividend for FY26?
NHPC announced an interim dividend of ₹1.40 per share for FY26. The record date is February 10, 2026.
Q3. Is NHPC a good dividend stock?
Yes. NHPC is considered a stable PSU dividend stock due to regulated returns, sovereign backing, and consistent payouts even during high capex phases.
Q4. What is the Subansiri project and why is it important for NHPC?
The Subansiri Lower project (2,000 MW) is NHPC’s largest under-construction hydro asset. Commissioning of units from FY26–27 can significantly boost future earnings.
Q5. Is NHPC a green energy stock?
Yes. NHPC is a key player in India’s green energy transition through hydropower, solar projects, and pumped storage systems.
