NHPC is the largest hydro power company in India with a current total installed capacity of 5,175 MW, accounting for 14% of India's hydro power capacity. The IPO aims to raise Rs. 5032-6038 crore through the issuance of fresh shares and an offer for sale to part finance ongoing hydro power projects. NHPC has a portfolio of operating power stations and projects located in regions with good hydro potential. The issue highlights NHPC's operational experience and efficiency in hydro power generation as well as the strategic importance and growth prospects of the hydro power sector in India.

1. ENAM DIRECT
IPO NOTE
NHPC
Issue highlights Issue highlights
Issue size: Rs 5032 – 6038 crore
NHPC is the largest hydro power company in India with a
No. of shares: 1,67,73,74,015
current total installed capacity of 5,175 MW. With 13 Comprising :
operating stations including Joint Ventures, it accounts for Fresh Issue: 1,11,82,49,343 Shares
14% of the Hydro power capacity in India. Offer for Sale: 55,91,24,672 Shares
Employee Res: 4,19,34,350 Shares
Net Issue: 1,63,54,39,665 Shares
NHPC plants are located in areas having good hydro
Face value: Rs 10
potential. This ensures ample availability of water Bid Lot : 175 Shares
resources for power generation. This also results in
Issue summary
operational advantage.
Price band: Rs 30 – Rs 36
Issue opens: Aug 07, 2009
NHPC has been awarded status of “Mini-Ratna” category-I
Issue closes: Aug 12, 2009
PSU in April 2008 in recognition of its performance. Lead managers: ENAM Securities,
Kotak Mahindra Capital, SBI
This Issue has been graded by ICRA Limited and has been Capital Markets
Registrar: Karvy Computershare
assigned a Grade of 3/5 indicating average fundamentals.
Shareholding (%)
Absence of fuel cost and attached fuel price volatility in
Pre-Issue Post-Issue
hydro power generation. 86.36
Government 100.00
Public (incl.
- 13.64
High operational efficiency as average capacity indices for employees)
FY2008 & FY 2009 stood at 96.12% and 93.61% respectively,
being higher than required under CERC regulation. Pre Post
issue issue
Objects of the issue No. of shares (in cr) 1118 1230
EPS 1.1 1.0#
Utilize the proceeds to part finance the construction and # - On a post issue equity base
development costs of certain of Identified Projects.
Issue break-up
Reservation for Shares % of issue
Amount utilized towards Issue Expenses
(in cr )
Employees 4.19 2
General corporate purposes. QIB 98.13 59
Non-Institutional 16.35 10
Retail 49.06 29
Financial summary
Net Income Adj. PAT EPS BV RoE RoCE
Period ended
(Rs Cr) (Rs Cr) (Rs) (Rs) (%) (%)
31.03.2006 2294 864.7 0.8 15.0 5.9 13.9
31.03.2007 2503 1049.1 0.9 14.9 6.8 16.6
31.03.2008 3140 1207.0 1.1 15.7 7.3 13.0
31.03.2009 3679 1244.2 1.1 16.4 6.9 11.2
# - Pat after minority interest
For additional information & risk factors please refer to the Red Herring Prospectus 28th Jul 2009

2. NHPC ENAM Securities Direct
BACKGROUND
Company and promoters
National Hydroelectric Power Corporation Limited (NHPC) was promoted by the
Government of India in November 1975.
The company has been designated as “Mini-Ratna” category-I public sector undertaking in
April 2008 in recognition of its performance. As a category-I company it has greater
autonomy to undertake new projects without government approval, subject to an
investment ceiling of Rs. 500 crore set by the government of India.
BUSINESS OVERVIEW
NHPC is a hydroelectric power generating company committed to the planning,
development and implementation of an integrated and efficient network of hydroelectric
projects in India. NHPC is involved in all the activities right from commencement to
development of hydroelectric projects.
NHPC has constructed and developed 13 hydroelectric power stations with a capacity of
5,175 MW. The current total generation capacity of the company is 5,134.2 MW, taking into
account total installed capacity of of the Loktak and Tanakpur power stations (combined
capacity of 1,520 MW) constructed and operated through its subsidiary NHDC.
The company’s power stations and hydroelectric projects are located predominantly in the
North and North East of India. IN FY09 the company and its subsidiary sold 14,587.88
MUs and 2,345.01 MUs of electricity, respectively.
Currently the company is involved in the construction of 11 hydroelectric projects, which
are expected to increase its total installed capacity by 4,622 MW. The company is also
awaiting the government approval of five projects with an anticipated capacity of 4,565
MW and for certain joint venture projects with an anticipated capacity of 2,166 MW.
The company has experience in the design, development, construction and operation of
hydroelectric projects, executing and managing all aspects of projects, from front-end
engineering design to commissioning, operation and maintenance.
NHPC has selective undertaken projects in alliance with state governments where there is
high hydro poetintial and thus tend to enjoy location and operational advantage
Strategy
Capitalizing on the power sector reforms and the Government of India’s vision of
“Power for All.”
Intend to enter into long term Long term power purchase agreements with its
customers.
Plans to invest expand its installed capacity through Joint Ventures and MoUs.
The company plans to continue to deliver advisory services to clients and
government entities in India and abroad and while taking advantage of
opportunities from changes in the Electricity Act, 2003, the Hydro Power Policy
2008, and other regulatory developments.
For additional information & risk factors please refer to the Red Herring Prospectus -2-

3. NHPC ENAM Securities Direct
INDUSTRY OVERVIEW
Overview
India has emerged as one of the fastest growing economies in the world. The Government
of India has identified the power sector as a key sector of focus to promote sustained
industrial growth with a mission –“Power for All by 2012.
Indian Power Sector
Demand Supply scenario: The power industry in India has historically been
characterized by energy shortages. According to the 17th EPS, India's peak demand
will reach 152,746 MW with an energy requirement of 968 bn units (BUs) by FY 2011-
12. By the FY 2016-17, peak demand will reach 218,209 MW with an energy
requirement of 1,392 BUs.
Consumption levels: The per capita consumption of energy in India is extremely low
in comparison to most other parts of the world, in part due to unreliable supply and
inadequate distribution networks.
Installed generation capacity: According to the Ministry of Power, as on September
30 2007, India has an installed generation capacity of approximately 135,782 MW. The
power industry has not grown sufficiently to meet demand and the economy still
faces an acute shortage of power.
Installed generation capacity by sector: As of September 30, 2007, the state
government sector led installed capacity levels with 70,947 MW, or 52.3% of the total
installed capacity in India, followed by the central sector at 46,166 MW, or 34.0% of
the total installed capacity in India, and by the private sector at 18,669 MW, or 13.7%
of total installed capacity in India.
Capacity Additions: The tenth five-year plan for 2002 to 2007 targeted a capacity
addition of 41,110 MW. However, the actual capacity addition in the 10th five-year
plan was just 21,180 MW. The 11th five-year plan recommends generation planning
based on an estimated 9.5% growth in required energy each year.
Hydro Electricity
Hydropower is more economical, less polluting, less damaging to the environment and a
renewable source of energy. Developing hydropower enhances energy security and there
is no fuel cost during the life of the project. In hydroelectric power station, energy is
harnessed from water by running it from a higher height to a lower height. Hydropower
stations are capable of instantaneous starting and stopping and are able to accommodate
various loading alternatives. This helps to improve the reliability of power systems and is
ideal for meeting demand during peak times.
Hydropower Potential in India
India has enormous potential for hydroelectric generation, as per CEA the potential is
84,000 MW at 60% load factor, which translates to 148,700 MW in terms of installed
capacity.
As of May 31, 2009 the total installed capacity in the country was 149,392 MW and
hydropower accounts for 36,878 MW (24.7%). The estimated potential of all the rivers( at
60% load factor) is 84,044 MW and probable installed capacities is 147,701 MW.
For additional information & risk factors please refer to the Red Herring Prospectus -3-

4. NHPC ENAM Securities Direct
Share of Hydropower
Despite the benefits of hydro power projects the share of hydropower has steadily
declined from around 37% in first five year plan to only 25% in FY2009. The hydro power
capacity addition was 7886 MW during the 10th plan which was 54.78% of the targeted
addition of 14,393.2 MW. In the 11th Plan the propsed capacity addition is 15,627 MW of
which only 3,392 MW has been commissioned and 12,235 MW is under construction.
Policy Initiatives
The government has set high priority for development of Hydropower power keeping in
mind the potential and availability of water resources.
The anticipated hydropower capacity additions in the 12th and 14th five year plans stands
at 31,000 MW and 36,494 MW respectively ,with a total hydropower capacity to reach
147,774 MW in the 14th Plan.
The GoI recently introduced a three-stage process for the development of new
hydroelectric projects in the central sector. The new stage-driven process aims to reduce
the time and cost overruns of hydroelectric projects.
Stage I: Survey and investigation of project site, and preparation of pre-feasibility report;
Stage II: Detailed investigation, preparation of a DPR and pre-construction activity
including land acquisition; and
Stage III: Execution of the project after investment decision through PIB/CCEA
Updated CERC regulations
Tariffs are determined by reference to AFC, which comprise primary energy charges and
capacity charges and are determined by return on equity, depreciation, interest on loan,
interest on working capital and operation and maintenance expenses.
Ultra Mega Power Projects
The threshold limit to obtain mega power project status is 500 MW for hydropower
projects. This threshold has been reduced to 350 MW certain states. The number of
incentives, including a 10 year income tax holiday help in generating more hydroelectricity
and the economies of scale in mega power projects help to substantially bring down power
tariffs.
Hydro Power Policy 2008
The Hydro Power Policy of 2008 lays emphasis on increasing private investment in the
development of hydroelectric projects. The policy aims at attracting private funds by
encouraging joint ventures with private developers and the use of IPP model besides
promoting power trading and speeding up the availability of statutory clearances
Future Outlook
The Ministry of Power has set a goal Mission 2012 - Power for All. Based on the 17th EPS,
the total energy requirement in India will increase to 968,659 GWh by FY 2012, and
1,392,066 GWh by FY 2017. The estimated the total investment potential of the sector is
around Rs 9,000 bn for a specified period up to fiscal year 2011. This presents a significant
opportunity for power generation companies, both in the public and the private sector.
For additional information & risk factors please refer to the Red Herring Prospectus -4-

5. NHPC ENAM Securities Direct
ISSUE PROFILE
Investment positives
NHPC is one of the largest hydro power generator in India with a capacity of 5,175
MW accounting for around 14% of total hydro capacity in India
Its projects are strategically located nearing areas of high potential for generation of
hydro power. These locations also happen to be near energy deficit areas.
The company has got into long term power purchase agreements for major portion
of capacity under construction.
The company has strong operating efficiency as reflected in average capacity index
of 93.61% for 200-09.
Being a mini ratna the company can enter in to greater autonomy to undertake new
projects without GoI approval subject to investment ceiling of Rs 500 cr.
Risk factors
Long gestation period in term of project execution may depress return on equity in
the construction phase.
Potential upside is limited as the tariffs are regulated by the government. Any
change in tariff policy may adversely affect the revenues.
Particularly when projects are located in complex terrain and harsh climatic
conditions may delay and thus increase the cost of the projects.
The majority of NHPC’s revenues are derived from sales of power to the state
electricity entities, as per the directives of the GoI, and there is no assurance that
company will always be able to secure payment from state electricity entities.
COMPARATIVE ANALYSIS
Book Value
Company EPS (Rs.) P/E # RONW (%)
(Rs.)
NHPC ( consolidated ) 1.08 16.45 [●] 6.58
CESC 32 271.5 8.6 12.9
Jai Prakash Hydro 3 21.9 28.2 15.8
KSK Energy 3 14.6 65.9 3.3
NTPC 9.9 69.6 19.6 14.4
Reliance Power 1 57.5 - 1.1
Tata Power Co. 32.1 366.5 34.3 8.1
Neyveli Lignite 8.1 56.4 15.2 12.7
Note: Source: Capitaline, *RHP
For additional information & risk factors please refer to the Red Herring Prospectus -5-

6. NHPC ENAM Securities Direct
ENAM Securities Direct Pvt. Ltd.
201, Laxmi Towers, 'A' Wing, Bandra-Kurla Complex, Bandra East, Mumbai - 400 051.
Board: 6680 3600 Helpline: 6680 ENAM Fax : 6680 3700
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For additional information & risk factors please refer to the Red Herring Prospectus -6-