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Y/E March (Rs mn) F 12 F 13 F 14e F 15e
Sales 56,547 53,066 63,731 83,276
EBITDA margin (%) 65.1 62.6 70.5 72.8
PAT 27,718 23,482 27,673 38,353
EPS (Rs) 2.3 1.9 2.2 3.1
P/E (x) 8.4 10.0 8.4 6.1
EV/EBITDA (x) 10.7 11.9 8.8 6.5
Dividend yield (%) 7.0 7.4 6.2 4.7
RoE (%) 10.5 8.4 9.7 12.7
RoCE (%) 6.5 5.2 6.0 7.7
Source: Company, SSLe

Grossing up impacts bottom-line; Revise to HOLD
NHPCs 4QF13 sales were down 25% YoY but up 8.8% QoQ to Rs10.3bn, 5.5%
lower than SSLe of Rs10.9bn. In F13, the company commissioned three projects
with a total capacity of 407MW, but however commercialised only 374MW. These
include three units of 33MW at TLD-III (the fourth unit got commercialised in May
2013), four units of 11MW at Chutak and three units of 77MW at Chamera-III.
Other income surprised by growing 14.5% YoY and 63% QoQ at Rs3.16bn,
largely due to the reversal of provision provided for the DESU dues of Rs1.2bn,
adjusted to that other income is 28% below SSLe of Rs2.73bn.
Employee expenses grew by 10.5% & 22.9% QoQ at Rs2.36bn, 33% higher than
SSLe of Rs1.78bn; this is due to some wage revision arrears that were paid
during the quarter. Other expense was also up 26.2% YoY and 27.6% QoQ at
Rs2.61bn, up 22% compared to SSLe. Depreciation is up 15.7% YoY to Rs
2.54bn, 14% higher than SSLe. Interest cost is up 26.9% YoY at Rs1.02bn, in-line
with SSLe. An exceptional item pertaining to the interest received on the DESU
dues amounting to Rs2.4bn was also received in 4QF13, due to which the PBT
was 11.7% higher than SSLe. Reported PAT came in at Rs5.83bn, 3.4% lower
than SSLe.
Adjusted PAT down YoY, primarily due to grossing up on MAT (See page 2)
Adjusted PAT came lower than the adjusted PAT of the previous year primarily on
account of the grossing up of RoE on MAT rate in F13, compared to F12. The
company mostly expects to gross up at MAT rate in F14e as well, as it will
commission a few more projects in F14.
Revised to HOLD with a TP of Rs22: At the CMP of Rs19, the stock is trading at a
P/BV of 0.9x/0.8x F14e/F15e of standalone estimates. The commissioning of three
projects (407MW) should provide for some growth for the company. We also expect
the company to have a pro-rated capacity addition of ~558/688MW in F14e/F15e,
which would increase the regulated equity base to Rs93.2/107bn, respectively. We
expect sales/PAT to grow by 20.1%/17.8/% to Rs63.7/27.7bn in F14e. Any passage
of a regulated return on the piling CWIP of the company will remain an important
trigger for the stock. Key risk on the stock remains the timely execution of its projects.
We revise our recommendation to HOLD with a revised TP of Rs22.

NHPC Ltd
NHPC IN; NHPC.BO
4Q/F13 result review HOLD
Current price Rs
Target price Rs
Upside/(downside) % 14
Earning estimate Revised
Market data
Mkt capitalisation Rs bn 236.8
Average daily vol '000 3669.0
52-week H/L Rs 29 / 15
Shares O/S mn 12301
Free float mn 1677.8
Promotor holding % 86.4
Foreign holding % 2.2
Face value Rs 10.0
Pri ce performance (%)
1m 3m 6m 1yr
Nifty (abs) 0.9 5.1 1.8 21.6
Stock (abs) (11.1) (28.8) (17.2) 5.2
Relative to Index (12.0) (34.0) (19.0) (16.4)
Performance
19
22

(20)
0
20
40
60
80
15
18
21
24
27
30
May-12 Aug-12 Nov-12 Feb-13 May-13
NHPC Rel. to BSEPOWR
(%) (Rs)

Source: Bloomberg, SSL

May 31, 2013
Power | India
Alok Ramachandran
+91 22 4227 3478
alok.ramachandran@sbicapsec.com


Rabindra Nath Nayak
+91 22 4227 3310
rabindra.nayak@sbicapsec.com
NHPC Ltd SBICAP Securities Ltd
rabindra.nayak@sbicapsec.com I alok.ramachandran@sbicapsec.com May 31, 2013 | 2

Quarterly financials
Y/E March (Rs mn) 4Q/F13 4Q/F12 YoY (%) 3Q/F13 QoQ (%) 4Q/F13e Var. (%)
Net Sales 10,994 14,650 (25.0) 10,104 8.8 10,958 0.3
EBITDA 6,050 10,136 (40.3) 6,132 (1.3) 7,713 (21.6)
EBITDA Margi n (%) 55.0 69.2 - 60.7 - 70.4 0.0
Other Income 3,157 2,757 14.5 1,935 63.1 2,727 15.8
Depreciation 2,546 2,201 15.7 2,390 6.6 2,225 14.5
PBIT 6,661 10,692 (37.7) 5,678 17.3 8,214 (18.9)
Interest 1,020 804 26.9 989 3.1 1,015 0.5
Exeptional item 2,400 - 0.0 - 0.0 - 0.0
PBT 8,041 9,889 (18.7) 4,689 71.5 7,199 11.7
Tax 2,208 1,868 18.2 1,526 44.7 1,159 90.5
PAT 5,833 8,021 (27.3) 3,163 84.4 6,040 (3.4)
Extraordinary items - - - - - -
Reported PAT 5,833 8,021 (27.3) 3,163 84.4 6,040 (3.4)
Source: SSLe

Annual Adjusted PAT
Y/E March (Rs mn) Mar-13 Mar-12
PAT (A) 23,482.2 27,717.7
Water cess - (1,390.2)
Earlier year sales arising out of finalisation of
tariff (806.6) (4,672.8)
Impact of wage revision arrears & MAT refund (1,439.2)
Other income - Interest from beneficiaries (1,412.4) (2,647.9)
Prior period adjustments (1.1) 582.9
Exceptional items (2,400.1) (688.6)
Liabilities/Provisions not reqd written back (1,928.7) (680.4)
Provision for expenses in r/o Kotli Bhel - IB & II - 800.8
Tax impact on adjustments 1,598.2 1,740.0
Tax rate (%) 20% 20%
Total Adjustments (B) (6,389.9) (6,956.2)
Adjusted PAT 17,092.3 20,761.5
Source: Company, SSLe














NHPC Ltd SBICAP Securities Ltd
rabindra.nayak@sbicapsec.com I alok.ramachandran@sbicapsec.com May 31, 2013 | 3

Analyst Meet Highlights
Provisional tariff for Chamera III (231MW) and Chutak (45MW) at Rs3.5/6.01
per unit has been approved.
Regulated equity: Regulated equity at the end of F13 stands at ~Rs75bn
and is expect to touch rs90bn by F14e.
Adjusted PAT: Adjusted PAT for F13 is down 18% at Rs17.1bn, primarily on
account of grossing up of RoE on the MAT rate. In F12, the company had
grossed up the RoE on the corporate tax rate, that led to the fall in profit. The
company could remain in MAT in F14e as well due to commissioning of few
projects during the year.
Increase in deferred tax: Deferred tax in F13 is higher primarily due to
depreciation of Chamera and Chutak.
CWIP & Gross Block: CWIP as on F13 stands at Rs197bn of which Rs50bn
is equity. Gross block stands at ~Rs256bn,
Debtors: O/S debtors >60days at Rs5.65bn down from Rs12bn. Of this a
major chunk is from J &K (Rs3.5bn), BRPL and BYPL and UPPCL.
Qualification by Auditors, clarified by the mgmt: The statutory auditors
have given a qualification on the accounts for the company. This qualification
is in regard to the companys Subansiri project in Arunachal Pradesh that has
been stalled since Dec'11. The auditors have qualified that an impact of
Rs4.21bn with regards to the capitalization of the borrowing cost and other
expenses on a project, where the work has been interrupted because of
reason beyond the control of the company, should have been incurred rather
than capitalised.
Clarification: The company mgmt has clarified that since administrative and
technical work is continuing at the project site, the administration and other
general overheads including borrowing costs have been capitalised, and
therefore are not required to be incurred.


Valuation Target Price 22, HOLD
Mode Price Objective
A. DCF Based Valuation 17
Comparative Valuation
Mode and Multiple
Multiple
Applied
Recommended
Multiple of NTPC
B. 2 year Forward PE based Price 22 9.8 14.0
C. 2 year Forward P/BV based Price 32 1.4 2.0
D. 2 year Forward EV/EBITDA based Price 16 7.7 11.0
Target Price (Average of A,B,C & D) 22
Source: SSLe
Rationale
FCFE of Ten Competitive periods with Cost of Equity
@12.1%, Terminal Growth Rate 1%
30% discount to the
recommended SBI Cap
Multiple of NTPC


NHPC Ltd SBICAP Securities Ltd
rabindra.nayak@sbicapsec.com I alok.ramachandran@sbicapsec.com May 31, 2013 | 4

Financials
Income Statement (Stand Alone) Cash Flow Statement (Stand Alone)
Y/E Mar (Rs mn) F 12 F 13 F 14e F 15e Y/E Mar (Rs mn) F 12 F 13p F 14e F 15e
Net Sales 56,547 53,066 63,731 83,276 PBT 35,170 32,021 37,737 52,299
% Growth 33.8 (6.2) 20.1 30.7 Depreciation 9,182 9,693 10,567 12,847
Operating expenses 19,741 19,827 18,784 22,634 Interest 3,422 3,854 6,167 7,938
EBIDTA 36,806 33,239 44,948 60,642 Others (7,304) 2,273.4 34.81 -
% growth 31.6 (9.7) 35.2 34.9 Operating CF 40,471 47,841 54,506 73,085
Other Income & EO 10,714 12,329 9,523 12,444 Change in WC (12,248) (15,252) 29,961 9,328
Depreciation 8,927 9,693 10,567 12,847 Direct taxes paid 7,378 8,539 10,063 13,947
EBIT 38,593 35,875 43,904 60,238 Others
EBIT margin 68.2 67.6 68.9 72.3 Net operating CF 20,845 24,050 74,404 68,466
Interest 3,422.4 3,853.8 6,166.9 7,938.4
PBT 35,170 32,021 37,737 52,299 Investing CF (19,757) (24,484) (24,572) (66,155)
% Growth 22.2 (9.0) 17.8 38.6
Other Investi ng
A i i i
Tax provision 7,453 8,539 10,063 13,947
PAT 27,718 23,482 27,673 38,353 Free Cash Fl ow 1,088 (434) 49,832 2,312
% growth 29.5 (15.3) 17.8 38.6 Financing CF 5,451 (3,445) (19,423) (3,493)
Dividend (%) 7.0 6.0 15.0 15.0 Net Change 6,539 (3,880) 30,409 (1,181)
EPS (Rs) 2.3 1.91 2.25 3.12 Opening Cash 53,501 60,040 56,160 86,569
BVPS (Rs) 21.4 22.6 23.1 24.5 Closing Cash 60,040 56,160 86,569 85,388
Balance Sheet (Stand Alone) Key Ratios (Stand Alone)
Y/E Mar (Rs mn) F12 F 13 F 14e F 15e Y/E Mar F12 F 13 F 14e F 15e
Equity Cap 123,007 123,007 123,007 123,007 OPM (%) 65.1 62.6 70.5 72.8
Regulated Equity 71,586 75,486 93,258 107,024 RoCE(%) 6.5 5.2 6.0 7.7
Net worth 263,535 278,405 284,669 301,578 Interest coverage (X) 13.9 11.2 8.8 9.2
Long term debt 162,728 174,175 178,196 198,423 Debt/Equity(X) 0.6 0.6 0.6 0.7
Net Deff Tax Liability & AAD 2,040 4,607 4,607 4,607 Debtors Days 78 148 65 65
Other Long term liabilities 19,518 17,057 21,224 26,887 Inventory Days 8 11 13 15
Long term provisions 11,875 7,219 8,804 10,523 Creditor Days 31 29 29 29
CL & Provisions
Current Liabilities & Provisions 67,901 63,587 82,435 93,691 Valuation Ratios
Total Liability 527,598 545,050 579,936 635,709 P/E 8.4 10.0 8.4 6.1
Net Block 357,181 377,490 391,337 444,485 Price/BV 0.9 0.8 0.8 0.8
Investments 24,991 24,006 24,006 24,006 EV/EBITDA 10.7 11.9 8.8 6.5
Long term loans & advances 14,286 12,387 12,544 12,704 Yield (%) 7.0 7.4 6.2 4.7
Other Non-current assets 11,819 9,444 9,444 9,444 EV/Sales 7.0 7.4 6.2 4.7
CA Loans &Advances
Current Investments 2,507 2,507 2,507 2,507
Inventory 438 571 688 906
Debtors 20,522 20,491 10,845 14,275
Cash & Bank 60,040 56,160 86,569 85,388 Du Pont Anal ysis
Loans & Advances 35,813 41,994 41,994 41,994 NPM (%) 49.0 44.3 43.4 46.1
Net Current Assets 48,911 55,629 57,662 48,872 Asset Turnover 0.1 0.1 0.1 0.1
Misc. Exp. 0 0 0 0 Leverage (x) 2.00 1.96 2.04 2.11
Total Assets 527,598 545,050 579,936 635,709 RoE(%) 10.5 8.4 9.7 12.7
Source: Company, SSLe

NHPC Ltd SBICAP Securities Ltd
rabindra.nayak@sbicapsec.com I alok.ramachandran@sbicapsec.com May 31, 2013 | 5

Recommendation History
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Stock Price Target Price
BUY SELL BUY HOLD



Date Stock Pri ce TP Rec.
5-Sep-11 25 25 REDUCE
2-Nov-11 25 27 REDUCE
28-J an-12 20 23 ADD
28-May-12 19 21 ADD
7-Aug-12 18 20 ADD
31-Oct-12 22 22 REDUCE
31-Dec-12 25 22 SELL
Rating based on Current Rating System (Feb'13)
Date Stock Pri ce TP Rec.
7-Feb-13 28 24 SELL
8-Mar-13 21 25 BUY
31-May-13 19 22 HOLD

SBICAP Securities Limited
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Tel.: 91-22-42273300/01 | Fax: 91-22-42273335 | Email: sbicapresearch@sbicapsec.com | www.sbicapsec.com
KEY TO INVESTMENT RATINGS (w.e.f. February 2013)
Guide to the expected return over the next 12 months. 1=BUY (expected to give absolute returns of 15 or more percentage points);
2=HOLD (expected to give absolute returns between -10 to 15 percentage points); 3=SELL (expected to give absolute returns less then -
10 percentage points)
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NHPC Ltd SBICAP Securities Ltd
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