Black book project on power generation company

A
Project Report
On
“Football Field Analysis on Power Generation Companies Which Influence
Investment Decision of Retail Investor”
In partial fulfilment of the requirements of
Post Graduate Diploma in Business Management
Conducted by
Rizvi Academy of Management
Under the guidance of
Prof. Umarfarooq Patel
Submitted by
Akash Mulchand Gupta
PGDBM
Batch: 2015-2017

CERTIFICATE
This is to certify that Mr Akash Mulchand Gupta a student of Rizvi Academy of
Management, of PGDBM IV bearing Roll No.2 and specialising in Finance, has
successfully completed the project titled
“Football Field Analysis on Power Generation Companies Which Influence
Investment Decision of Retail Investor”
Under the guidance of Prof. Umar Farooq Patel in partial fulfilment of the
requirement of Post Graduate Diploma in Business Management by Rizvi Academy
of Management for the academic year 2015 – 2017.
_______________ _______________ _______________
Prof. Umar Farooq Prof. Umar Farooq Dr. Kalim Khan
Project Guide Academic Coordinator Director
Date: Date: Date:

ACKNOWLEDGEMENT
I would like to express my gratitude towards my project guide Prof. Umar Farooq
without whose, continuous guidance and encouragement, this project would not have
been possible.
Also, I would like to thank our director Dr Kalim Khan who has provided the
necessary infrastructure and guidance in the course of the project. Also, I would like
to take this opportunity to thank all the teaching as well as non-teaching staff for their
continuous help and support.
____________
Akash M. Gupta
Roll No.02
PGDBM-Finance
2015-17

Executive Summary
The purpose of doing this project is to identify which of the method will provide
appropriate information to retail investor to deal with the power generation company.
Under this project, I am going to cover valuation technique on Power generation
Company. My major focus is on NHPC. While determining its fair value I will also
compare its performance with its peer companies such as Tata Power, Neyveli lignite,
and Reliance power. These companies are selected based on their market value which
is equal or close to each other. In most of the case I will do analysis on two public
company i.e. NHPC & NLC and private company i.e. Reliance power & Tata power.
Equity Valuation of these companies has been undertaken by taking into consideration
previous five years data pertaining to these companies so as to find out the business
performance and to give proper recommendation to the investors who want to buy, sell
or hold the share based on past performance and estimating the stock potential in future.
This project is undertaken to evaluate and analyse the financial statement of NHPC with
a view to determining the fair value of a share with the use of discounted cash flow
model, Relative Valuation and Ratio Analysis method. And while doing valuation
technique I am going to forecast the terminal value of the share and get the intrinsic
value of share then recommending as which stock is undervalued or overvalued.

Objectives of the Study
 To study the performance of power generation Companies namely NHPC and
its peer company like Tata Power, Neyveli Lignite, and Reliance power.
 To analyse and evaluate the financial performance of these companies through
fundamental analysis by taking into consideration data of last five years.
 To determine the Equity prices through Equity Valuation Models.
 To evaluate the prices of these companies.
Scope of the Study
 The study is conducted only on the above-mentioned power generation
companies.
 The study covers only top five companies in Power generation sector
 Five years (2012-16) data has been taken into consideration for the study

Contents
Chapter 1: Introduction ..............................................................................................1
1.1 Introduction to Indian Power Sector ....................................................................1
1.1.1 History of Indian Power Sector.....................................................................7
1.1.2 Problems with India’s Power Sector.............................................................8
1.2 Industry Fundamental Analysis .........................................................................10
Chapter 2: Government Initiated Activities............................................................15
Chapter 3: Company Overview................................................................................17
3.1 National Hydroelectric Power Corporation (NHPC) .........................................17
3.2 Neyveli Lignite: .................................................................................................20
3.3 Tata Power: ........................................................................................................21
3.4 Reliance Power: .................................................................................................23
Chapter 4: Company Evaluation..............................................................................25
4.1 Analysis of Financial Statement....................................................................25
4.1.1 Horizontal Analysis ....................................................................................25
Chapter 5: Valuation of Companies.........................................................................34
5.1 Discounted Cash Flow .......................................................................................34
5.1.1 Assumptions of DCF: .................................................................................34
5.2 Relative Valuation: ............................................................................................46
5.3 Ratio Analysis:...................................................................................................49
5.3.1 Profitability Ratios ......................................................................................49
Chapter 6: Conclusions .............................................................................................54
Bibliography ...............................................................................................................55

Rizvi Academy of Management Page | 1
Chapter 1: Introduction
1.1 Introduction to Indian Power Sector
Power is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existence and development of adequate
infrastructure are essential for sustained growth of the Indian economy.
The power sector in India is mainly governed by the Ministry of Power. There are three
major pillars of power sector these are Generation, Transmission, and Distribution. As
far as generation is concerned it is mainly divided into three sectors these are Central
Sector, State Sector, and Private Sector.
India’s power sector is one of the most diversified in the world. Sources of power
generation range from conventional sources such as coal, lignite, natural gas, oil, the
hydro and nuclear power to viable non-conventional sources such as the wind, solar,
and agricultural and domestic waste. Electricity demand in the country has increased
rapidly and is expected to rise further in the years to come. In order to meet the
increasing demand for electricity in the country, massive addition to the installed
generating capacity is required.
Central Sector or Public Sector Undertakings (PSUs), constitute 24.7%
(76,182MW) of total installed capacity i.e., 31,005.28 MW (as on 31/12/2016) in
India. Major PSUs involved in the generation of electricity include NHPC Ltd., NTPC
Ltd. and Nuclear Power Corporation of India (NPCIL).
Besides PSUs, several State-Level Corporations are there which accounts for about
33.1% of overall generation, such as Jharkhand State Electricity Board (JSEB),
Maharashtra State Electricity Board (MSEB), Kerala State Electricity Board (KSEB),
in Gujarat (MGVCL, PGVCL, DGVCL, UGVCL four distribution Companies and one
controlling body GUVNL, and one generation company GSEC), are also involved in
the generation and intra-state distribution of electricity.
Other than PSUs and state level corporations, Private Sector Enterprises also play a
major role in generation, transmission, and distribution, about 42.13% (1,30,559MW)
of total installed capacity is generated by the private sector.

Sector MW % of Total
State Sector 101,472 33.1%
Central Sector 76,182 24.7%
Private Sector 130,559 42.3%
Total 308,834
Source: Ministry of Power
The Overall generation in the country has been increased from 1048.673 during 2014-
15 to 1107.386 BU* during the year 2015-16. The Category wise generation
performance as follows:-
Thermal Increased by 7.45 %
Hydro Reduced by 6.09 %
Nuclear Increased by 3.63 %
Bhutan Import Increased by 4.72 %
Overall Growth rate recorded by 5.64 %

The annual growth in power generation during recent years is as under:
YEAR
GROWTH IN
CONVENTIONAL
GENERATION (%)
GROWTH IN
RENEWABLE
GENERATION (%)
GROWTH IN
TOTAL
GENERATION
(%)
2008-09 2.7 - -
2009-10 6.6 - -
2010-11 5.56 - -
2011-12 8.11 - -
2012-13 4.01 - -
2013-14 6.04 - -
2014-15 8.43 - -
2015-16 5.64 6.47 5.69
2016-17* 4.53 28.29 5.96
*Up to October 2016 (Source: Ministry of Power)
About 69.3% of the electricity consumed in India is generated by thermal power plants,
14% by hydroelectric power plants, and 1.9 % by nuclear power plants and rest by
14.9% from other alternate sources like solar, wind, biomass etc. 60.8% of India’s
commercial energy demand is met through the country’s vast coal reserves.

Fuel MW % of Total
Total Thermal 214,004 69.3%
Coal 187,803 60.8%
Gas 25,282 8.2%
Oil 919 0.30%
Hydro (Renewable) 43,133 14.0%
Nuclear 5,780 1.9%
RES** (MNRE) 45,917 14.9%
Total 308,834
ELECTRICITY GENERATION PERFORMANCE
The electricity generation target for the year 2016-17 has been fixed as 1178 Billion
Unit (BU). i.e. growth of around 6.38% over an actual generation of 1107.822 BU for
the previous year (2015-16). The generation during 2015-16 was 1107.822 BU as
compared to 1048.673 BU generated during April- March 2015, representing a growth
of about 5.64%.

Year Energy Generation from
Conventional Sources
(BU)
% of growth
2009-10 771.551 6.6
2010-11 811.143 5.56
2011-12 876.887 8.11
2012-13 912.056 4.01
2013-14 967.150 6.04
2014-15 1048.673 8.43
2015-16 1107.822 5.64
2016-17* 777.506 4.99

The power supply position in the country during 2009-10 to 2016-17:
Energy Peak
Year
Requirement Availability
Surplus(+)/
Deficits(-)
Peak
Demand
Peak Met
Surplus(+) /
Deficits(-)
(MU) (MU) (MU) (%) (MW) (MW) (MW) (%)
2009-
10
8,30,594 7,46,644 -83,950
-
10.
1
1,19,166 1,04,009
-
15,157
-
12.7
2010-
11
8,61,591 7,88,355 -73,236 -8.5 1,22,287 1,10,256
-
12,031
-9.8
2011-
12
9,37,199 8,57,886 -79,313 -8.5 1,30,006 1,16,191
-
13,815
-
10.6
2012-
13
9,95,557 9,08,652 -86,905 -8.7 1,35,453 1,23,294
-
12,159
-9.0
2013-
14
10,02,257 9,59,829 -42,428 -4.2 1,35,918 1,29,815 -6,103 -4.5
2014-
15
10,68,923 10,30,785 -38,138 -3.6 1,48,166 1,41,160 -7,006 -4.7
2015-
16
11,14,408 10,90,850 -23,558 -2.1 1,53,366 1,48,463 -4,903 -3.2
2016-
17 *
6,86,100 6,81,347 -4,753 -0.7 1,59,542 1,56,934 -2,608 -1.6

1.1.1 History of Indian Power Sector
The first demonstration of electric light in Calcutta was conducted on 24 July 1879 by
P W Fleury & Co. On 7 January 1897, Kilburn & Co secured the Calcutta electric
lighting license as agents of the Indian Electric Co, which was registered in London on
15 January 1897. A month later, the company was renamed the Calcutta Electric Supply
Corporation. The control of the company was transferred from London to Calcutta only
in 1970. Enthused by the success of electricity in Calcutta, power was thereafter
introduced in Bombay. Mumbai saw electric lighting demonstration for the first time in
1882 at Crawford Market and Bombay Electric Supply & Tramways Company (BEST)
set up a generating station in 1905 to provide electricity for the tramway. The first
hydroelectric installation in India was installed near a tea estate at Sidrapong for the
Darjeeling Municipality in 1897. The first electric streetlight in Asia was lit on 5 August
1905 in Bangalore. The first electric train ran between Bombay's Victoria Terminus and
Kurla along the Harbour Line, in 1925.
On 18 August 2015, Cochin International Airport became the world's first fully solar-
powered airport with the inauguration of a dedicated solar plant. India began utilising
grid management on a regional basis in the 1960s. Individual State grids were
interconnected to form 5 regional grids covering mainland India. The grids were the
Northern, Eastern, Western, North Eastern and Southern Grids. These regional links
were established to enable transmission of surplus electricity between States in each
region. In the 1990s, the Indian government began planning for a national grid.
Regional grids were initially interconnected by asynchronous HVDC (High Voltage
Direct Current) back-to-back links facilitating the limited exchange of regulated power.
The links were subsequently upgraded to high capacity synchronous links.
The first interconnection of regional grids was established in October 1991 when the
North Eastern and Eastern grids were interconnected. The Western Grid was
interconnected with the aforementioned grids in March 2003. The Northern grid was
also interconnected in August 2006, forming a Central Grid synchronously connected
operating at one frequency. The sole remaining regional grid, the Southern Grid, was
synchronously interconnected to the Central Grid on 31 December 2013 with the
commissioning of the 765 kV Raichur-Solapur transmission line, thereby establishing
the National Grid.

1.1.2 Problems with India’s Power Sector
India's electricity sector faces many issues. Some are:
 Inadequate last mile connectivity is the main problem to supply electricity for
all users. The country has already adequate generation and transmission
capacity to meet the full demand temporally and spatially. However, due to lack
of last-mile link-up with all electricity consumers and reliable power supply (to
exceed 99%), many consumers depend on DG (Diesel Generator) sets using
costly diesel oil for meeting unavoidable power requirements. The distribution
companies should focus on providing uninterrupted power supply to all the
consumers who are using costly DG set's power. This should be achieved by
laying separate buried power cables (not to be affected by rain and winds) for
emergency power supply in addition to the normal supply lines. Emergency
supply power line shall supply power when the normal power supply line is not
working. The emergency power supply would be charged at a higher price
without any subsidy but less than the generation cost from diesel oil. Nearly 80
billion kWh electricity is generated annually in India by DG sets, which are
consuming nearly 15 million tonnes of diesel oil.
 A system of cross-subsidization is practised based on the principle of 'the
consumer's ability to pay'. In general, the industrial and commercial consumers
subsidise the domestic and agricultural consumers. Further, Government
giveaways such as free electricity for farmers, partly to curry political favour,
have depleted the cash reserves of the state-run electricity distribution system.
This has financially crippled the distribution network, and its ability to pay
power to meet the demand. This situation has been worsened by government
departments of India that do not pay their bills.
 The residential building sector is one of the largest consumers of electricity in
India. Continuous urbanisation and the growth of population result in increasing
power consumption in buildings. Thus, while experts express the huge potential
for energy conservations in this sector, the belief still predominates among
stakeholders that energy-efficient buildings are more expensive than
conventional buildings, which adversely affects the greening of the building
sector.

 Key implementation challenges for India's electricity sector include new project
management and execution, ensuring availability of fuel quantities and
qualities, lack of initiative to develop large coal and natural gas resources
available in India, land acquisition, environmental clearances at state and central
government level, and training of skilled manpower to prevent talent shortages
for operating latest technology plants. Shortages of fuel despite abundant
reserves of coal, India is facing a severe shortage of coal. The country is not
producing enough to feed its power plants. Some plants do not have reserve coal
supplies to last a day of operations. India's monopoly coal producer, state-
controlled Coal India, is constrained by primitive mining techniques and is rife
with theft and corruption; Coal India has consistently missed production targets
and growth targets. Poor coal transport infrastructure has worsened these
problems. To expand its coal production capacity, Coal India needs to mine new
deep sites. However, most of India's coal lies under protected forests or
designated tribal lands. Any mining activity or land acquisition for
infrastructure in these coal-rich areas of India has been rife with political
demonstrations, social activism, and public interest litigations.
 Lack of clean and reliable energy sources such as electricity is, in part, causing
about 800 million (800 million) people in India to continue using traditional
biomass energy sources – namely fuel wood, agricultural waste and livestock
dung – for cooking and other domestic needs. Traditional fuel combustion is the
primary source of indoor air pollution in India, causes between 300,000 to
400,000 deaths per year and other chronic health issues.
 Average transmission, distribution and consumer-level losses exceeding 30%,
which includes auxiliary power consumption of thermal power stations,
fictitious electricity generation by wind generators & independent power
producers (IPPs), etc. Hydroelectric power projects in India's mountainous north
and northeast regions have been slowed down by ecological, environmental and
rehabilitation controversies, coupled with public interest litigations.

1.2 Industry Fundamental Analysis
Financial Stability Ratios:
Interpretation: From the above diagram it clearly identifiable that the industry was
facing some issue in terms of conducting a business activity that’s why there was a hike
in terms of borrowed fund while it gets repaid in the year 2016. It seems that industry
has realised more on borrowed funds and less on shareholders’ funds as reflected by a
debt-equity ratio of 1.32:1 in the year 2012 and 1.34:1 in the year 2016.
Interpretation: Interest coverage ratio may tell a good deal about an Industry current
financial position, analysing interest coverage ratios over time will often give a much
clearer picture about an Industry position and trajectory. The lower an Industry interest
coverage ratio is, the more its debt expenses burden the When an Industry interest
coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable.
1.32
1.51 1.56 1.61
1.34
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2012 2013 2014 2015 2016
TotalDebt/Equity
1.15 1.11
1.22
1.8
1.62
0
0.5
1
1.5
2
2012 2013 2014 2015 2016
Interest Cover(x)

From the above data, it seems that industry interest Coverage ratio is less than is 1.50%
in the year 2012. However, it increases to 1.62% in the year 2016 which is good.
Growth Ratio
Interpretation: From the above diagram it seems that net sales growth of the industry
was decline continuously from 23.28% for the year 2012 to 7.68% in the year 2016. It
may be due to lack of production capacity or idle time or a new project started, therefore
it will take a time to implement.
Interpretation: From the above diagram it seems that EBIT growth of the industry is
fluctuating and not constant from time to time. In the year 2012 it was -0.56%,
However, it increased to 24.19% in the year 2013 and 33.42% in the year 2014.However
in the year 2016 again it declines to 12.57%. EBIT allows analysts to focus on the
23.33
15.2
11.16 11.72
7.68
0
0
5
10
15
20
25
2012 2013 2014 2015 2016
Net Sales Growth(%)
-0.56
24.19
33.42
12.85 12.57
-5
0
5
10
15
20
25
30
35
40
2012 2013 2014 2015 2016
EBIT Growth(%)

outcome of operating decisions while excluding the impacts of non-operating decisions
Like interest expenses (a financing decision), tax rates (a governmental decision).
Efficiency Ratios
Interpretation: stock turnover ratio shows how fast there is a movement of sales
happening. In this case, stock 16.69 weeks of sales in the year 2012 which goes up to
20.59 weeks of sales in the year 2016. Which means it is the high stock which would
result in high holding cost i.e. extra interest, rates, salary, insurance.
Interpretation: From the diagram, it is identifiable that earlier the management was
very effective in collecting the money but fraud in the power industry and availing
various credit policy the management faces problem in collecting receivables. As it is
shown in the diagram upward trend in the collection which is bad for the industry.
16.69 17.31 17.33 17.01
20.59
0
5
10
15
20
25
2012 2013 2014 2015 2016
Inventory Days
70.8
74.35
75.63
72.26
81.16
64
66
68
70
72
74
76
78
80
82
2012 2013 2014 2015 2016
Receivable days

Performance Ratios
Interpretation: Return on assets (ROA) is an indicator of how profitable a company is
relative to its total assets. ROA gives an idea as to how efficient management is at using
its assets to generate earnings. It seems that industry uses its assets much better to
earning over the year from -0.63 in the year 2012 to 2.48 in the year 2016 as there is a
steep upward trend which is good for the industry.
Interpretation: The return on capital employed ratio shows how much profit each
rupee of employed capital generates. Obviously, a higher ratio would be more
favourable because it means that more rupees of profits are generated by each rupee of
capital employed. From the diagram, it seems that ROCE is growing considerably from
7.69% in the year 2012 to 12.76% in the year 2016.
-0.63 -0.65
0.32
1.04
2.48
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
2012 2013 2014 2015 2016
ROA(%)
7.69 7.83
9.04
10.38
12.76
0
2
4
6
8
10
12
14
2012 2013 2014 2015 2016
ROCE(%)

Interpretation: The diagram upward trend in investors’ money from negative return
in the year 2012 to positive return from 2014 to 2016.For instance, a return of .2
indicates that for every rupee invested in capital employed, the company made 20 cents
of profits. It will encourage investors to invest in industry for a higher return.
-1.55 -1.72
0.89
2.89
6.03
-4
-3
-2
-1
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016
ROE(%)

Chapter 2: Government Initiated Activities
The Government of India has identified power sector as a key sector of focus so as to
promote sustained industrial growth. Some initiatives by the Government of India to
boost the Indian power sector:
 The Government of India plans to set up a US$ 400 million fund, sourced
from The World Bank, which would be used to protect renewable energy
producers from payment delays by power distribution firms, while at the same
time protecting the distribution firms from the shrinking market for
conventional grid-connected power, caused by wider adoption of roof-top
solar power generation.
 The Ministry of Power plans to set up two funds of US$ 1 billion each, which
would give investment support for stressed power assets and renewable
energy projects in the country.
 Mr Piyush Goyal, Minister of State with Independent Charge for Power, Coal,
New and Renewable Energy and Mines, launched an online portal for the star
rating of mines, which will bring all mines to adopt sustainable practices, and
thereby ensure compliance with environmental protection and social
responsibility by the mining sector.
 The Ministry of New and Renewable Energy (MNRE), which provides 30
percent subsidy to most solar powered items such as solar lamps and solar
heating systems, has further extended its subsidy scheme to solar-powered
refrigeration units with a view to boosting the use of solar-powered cold
storages.
 Mr. Piyush Goyal, Minister of State with Independent Charge for Power,
Coal, New and Renewable Energy and Mines, inaugurated the Tarang
(Transmission App for Real-Time Monitoring & Growth) mobile app and web
portal for electronic bidding for transmission projects, which is expected to
enhance ease, accountability, transparency, and boost investor confidence in
power transmission sector.
 The Ministry of Shipping plans to install 160.64 MW of solar and wind-based
power systems at all the major ports across the country by 2017, thereby
promoting the use of renewable energy sources and giving a fillip to
government's Green Port Initiative.

 The Government of India and the Government of the United Kingdom have
signed an agreement to work together in the fields of Solar Energy and Nano
Material Research, which is expected to yield high quality and high impact
research outputs having industrial relevance, targeted towards addressing
societal needs.
 The Ministry of Petroleum and Natural Gas is seeking to enhance India's crude
oil refining capacity through 2040 by setting up a high-level panel, which will
work towards aligning India's energy portfolio with changing trends and
transition towards cleaner sources of energy generation.
 The Government of India plans to start as many as 10,000 solar, wind and
biomass power projects in next five years, with an average capacity of 50
kilowatts per project, thereby adding 500 megawatts to the total installed
capacity.
 Mr Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and
New & Renewable Energy outlined Government of India’s goal to provide
electricity to every home in India by 2020, while also focusing on ensuring
the cost of power is affordable to everyone.
 The government of India has asked states to prepare action plans with year-
wise targets to introduce renewable energy technologies and install solar
rooftop panels so that the states complement government's works to achieve
175 GW of renewable power by 2022.
 The Government of India announced a massive renewable power production
target of 175,000 MW by 2022; this comprises generation of 100,000 MW
from solar power, 60,000 MW of wind energy, 10,000 MW from biomass,
and 5,000 MW from small hydropower projects.

Chapter 3: Company Overview
3.1 National Hydroelectric Power Corporation (NHPC)
NHPC Company was incorporated on November 7, 1975, under the Companies Act as
a private limited company under the name National Hydro Electric Power Corporation
Private Limited. The company was converted into a public limited company with effect
from April 2, 1986. The promoter of the company is the President of India acting
through the MoP, GoI and currently, holds 100% of the paid-up share capital of the
company.
The company is a hydroelectric power generating company dedicated to the planning,
development, and implementation of an integrated and efficient network of
hydroelectric projects in India. It executes all aspects of the development of
hydroelectric projects, from concept to commissioning.
It has developed and constructed 13 hydroelectric power stations and its total installed
capacity is currently 5,175 MW. This includes two power stations with a combined
capacity of 1,520 MW, constructed and operated through the Subsidiary, NHDC. Its
power stations and hydroelectric projects are located predominantly in the North and
North East of India, in the states of Jammu & Kashmir, Himachal Pradesh, Uttarakhand,
Arunachal Pradesh, Assam, Manipur, Sikkim and West Bengal. The company
generated 14,813.16 MUs of electricity in Fiscal 2008.
Presently it is engaged in the construction of 11 additional hydroelectric projects, which
are expected to increase the total installed capacity by 4,622 MW. Further eight
projects, including one joint venture project, with an anticipated capacity of 5,751 MW,
are currently awaiting sanction from the CCEA. Survey and investigation works are
being carried out to prepare project proposal reports for nine additional projects,
totalling 7,255 MW of anticipated capacity.
The company selectively forms alliances with state governments to undertake project
development. Pursuant to a MoU with the government of Madhya Pradesh, it
incorporated its subsidiary on August 1, 2000, to take advantage of the hydroelectric
potential of the Narmada river basin. In addition, in September 2007 it signed a MoU
with the government of Manipur to establish a joint venture to develop the Loktak
Downstream hydroelectric project, and in June 2007 it entered into a memorandum of

agreement (MoA) with the government of Arunachal Pradesh to establish the Dibang
project on an own-and-operate basis. Further, on October 10, 2008, it signed a MoU
with the JKSPDC, the government of Jammu & Kashmir and PTC to implement the
Pakal Dul and other hydroelectric projects in the Chenab river basin with an anticipated
aggregate installed capacity of approximately 2,100 MW.
The company has experience in the design, development, construction and operation of
hydroelectric projects. It executes and manages all aspects of projects, from front-end
engineering design to commissioning and operation and maintenance of the project. It
has also been engaged as a project developer for certain projects, where its scope of
work is to design, develop and deliver a hydroelectric power station to a client on an
agency basis. It also provides contract-based technical, management advisory and
consultancy services to domestic and international clients.
Business area of the company:
The company was established to plan, promote and organise an integrated and efficient
development of power in all its aspects through conventional and non-conventional
sources in India and abroad including planning, investigation, research, design and
preparation of preliminary, feasibility and definite project reports, construction,
generation, operation and maintenance of power stations and projects, transmission,
distribution, trading and sale of power generated at stations in accordance with the
national economic policy and objectives laid down by the Central Government from
time to time and release of water and other needs to the State Government as per the
agreed parameters.
74.50%
14.10%
11.40%
ShareholderPattern
Promoters Institutions Non-Institutions

Market Profile
Share Price Rs.30.25
52 Week Low - High (Rs.) 18.5 – 31.75
Market Capitalization (Rs.in crore) 33,488.77
P/B Ratio (2016) 1..16
Face value (Rs.) 10

3.2 Neyveli Lignite:
Neyveli Lignite Corporation (NLC), incorporated in 1956, is the business of lignite
mining and power generation. At present, NLC operates three opencast lignite mines of
the total capacity of 24 million tonnes and three thermal power stations with total
installed capacity of 2490 Mega Watt.
Neyveli Lignite Corporation is a ˜Miniratna” Public Sector Enterprise, under the
administrative control of Ministry of Coal. The company also operates subsidiary -NLC
Tamilnadu Power Limited.
Market Profile
52 Week Low - High (Rs.) 60.35 – 100.10
P/B Ratio (2016) 1..05
Face value (Rs.) 10
90.00%
8.30%
1.70%
Shareholding Pattern
Promoters
Institutions
Non-Institutions

3.3 Tata Power:
Tata Power, erstwhile known as Tata Electric, pioneered the generation of electricity in
India nine decades ago. The company started as Tata Hydroelectric Power Supply
Company in 1911, it got its new status with the amalgamation of two entities viz, Tata
Hydroelectric Power Supply Company and Andhra Valley Power Supply Company in
1916. Today, it is the country's largest private power utility, established as a licensee in
Mumbai and with ambitious expansion plans from being essentially Mumbai-centric to
a major national player, not only in the fields of Power but also in Energy and
Broadband Communication.
Services offered by the company:
 Design & Development- Strategic Electronics Division (SED) - SED (Mumbai)
was established in 1967 and is today a leading development organisation,
having pioneered indigenous design and development of many hi-tech systems
for Defence and Industry. The manufacturing facility was established in 1982
and is situated in Bangalore.
 Power Projects & Related Services- Tata Power also extends its expertise for
Setting up Independent Power Plants (IPP) Setting up Captive Power Plants
(CPP)Power Transmission and Distribution Projects Operation and
Maintenance Services (O&M Services)
33.02%
50.53%
16.45%
Shareholding Pattern
Promoters
Institutions
Non- Institutions

Market Profile
52 Week Low - High (Rs.) 55 – 84..45
P/B Ratio (2016) 1..40
Face value (Rs.) 1

3.4 Reliance Power:
Reliance Power was incorporated as Bawana Power Private Limited on January 17,
1995, its name changed to Reliance Delhi Power Private Limited by a special resolution
of the members passed at the EGM on February 1, 1995. On January 23, 2004, the
Name got changed to Reliance EGen Private Limited by a special resolution of the
members passed at the EGM. On March 5, 2004, the name changed to Reliance Energy
Generation Private Limited by a special resolution of the members passed at the EGM.
Finally, on July 4, 2007, the name got changed to Reliance Power Limited by a special
resolution of the members passed at an EGM.
The company was established to carry on all or any of the business of producers,
manufacturers, generators, suppliers, distributors, transformers, converters,
transmitters, processors, developers, stores, procurers, carriers and dealers in electricity,
all form of energy and any such products and by-products derived from such business
including without limitation, steam, fuels, ash, conversion of ash into bricks and any
product derived from or connected with any other form of energy, including, without
limitation to conventional sources such as heat, thermal, hydel and/or from non-
conventional sources such as tidal waves, wind, solar, geothermal, biological, biogas
and CBM.
75%
40.82%
13.87%
0.30%
Shareholding pattern
Promoters
Institutions
Non- Institution
Others

Market Profile
52 Week Low - High (Rs.) 38.20 – 61.40
P/B Ratio (2016) 0.78
Face value (Rs.) 10

Chapter 4: Company Evaluation
4.1Analysis of Financial Statement
4.1.1 Horizontal Analysis
(Public Sector Company)
NHPC NLC
(Income Statement)
Interpretation: As per above diagram it is clearly identifiable that Neyveli Lignite
Corporation has a competitive advantage over sales which is CAGR of 8% when it
gets compared with NHPC Income from the operation which is CAGR of 6% from
2012 to 2016.
Interpretation: Above diagram shows that when the revenue generation activity
increases the operating cost for conducting business activity also increases. The
-20%
-10%
0%
10%
20%
30%
40%
Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016
Income from Operation
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
EBIT Excluding Other Income

diagram shows that NLC has a positive trend in its Earnings before Interest and tax
and it has control over its operating expenses and there is 6% CAGR in its business
earning apart from other income while NHPC has 3% of CAGR in its EBIT from
2012 to 2013.
Interpretation: Above diagram shows that when the revenue generation activity
increases the operating cost for conducting business activity also increases there for
the company enjoys profit or bears loss and after the operating profit the company is
liable for interest and tax then whatever the amount company left with it is available
for the shareholder. From the year 2012 to 2016 In this case of NLC company has
negative growth i.e. -4% in NPAT while in NHPC i.e. -3%.
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
NPAT

(Balance Sheet)
Interpretation: The shareholder’s fund in Neyveli Lignite Corporation (NLC) across
the year has increased i.e. CAGR of 6% while in the case of National Hydro Power
Corporation (NHPC) which is 2% CAGR. During the year Reserves & Surplus of
NLC is increased by CAGR rate of 7% while in the case of NHPC it has increased by
6%.
Interpretation: The sources of fund comprise of equity and debt which indicate how
much capital has been employed in the company. The above diagram shows that NLC
has taken a more unsecured loan to conduct its business activity there is 14% CAGR
in its loan while in the case of NHPC it just 2% CAGR from 2012 to 2016.
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Shareholder's Funds
-40%
-20%
0%
20%
40%
60%
80%
BorrowedFund
Secured Loans Unsecured Loans Secured Loans Unsecured Loans

Interpretation: It is important for a company to use its capital which would help in
generating profit or expanding business activity. From 2012 to 2016 NHPC
expanding its business activity by investing a major chunk of their capital in fixed
assets as there is CAGR of 11% investment in fixed assets as compared with NLC
whose investment in Fixed assets 8% of CAGR.
Interpretation: From above diagram, it is clearly identifiable that NLC has spent
more on investment from 2012 to 2016 it investments has got increased by CAGR of
21% as compared with CAGR of 5% of NHPC. Government major concern is in
generating power with renewable energy for which NLC has majorly focused.
0%
10%
20%
30%
40%
50%
60%
FixedAssets
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Investment

Interpretation: Net current assets is Current assets minus current liabilities. This
amount indicates how much capital is being generated or used up by day-to-day
activities. If net current assets are negative, the company may have difficulty
financing its day-to-day operations. The above diagram shows that from 2012 to 2016
NHPC facing problem in managing its short-term debt while is in the case of NLC it
is vice versa.
-15%
-10%
-5%
0%
5%
10%
15%
20%
Net CurrentAssets

(Private sector Company)
Reliance Power TATA Power
(Income statement)
Interpretation: As both, the company is from private sector contributing much more
in power sector in India. In this case Net sales of reliance power showing steeper
growth as compared with marginal growth of Tata power from last 5years.
Interpretation: this diagram indicate after sales how much money hold back that is
deducting all operating expenses through this diagram it is identifiable that Tata
power has shown positive operating profit as compared with reliance power.
-100%
-50%
0%
50%
100%
150%
Net Sales
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
EBIT

Interpretation: NPAT shows that after deducting all cost whether it is direct or
indirect and Taxes how much actual money is being left for the shareholder. Above
diagram shows over last 5year reliance, power has positive NPAT which is positive
7% CAGR while in the case of Tata power it is -10% CAGR.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
NPAT

(Balance sheet)
Interpretation: The above diagram shows that Tata power issuing more equity share
fund which is 3% CAGR from 2012 to 2016 that means they require more funding to
do their business activity while in the case of reliance power it is vice versa.
Interpretation: Investment in fixed assets indicate how effective company is
adaptive to current environment that is in term of the need of modern machinery or
skilled employee in case of reliance power the fixed assets grown by CAGR of 38%
while the fixed assets in Tata power it has grown by8% from 2012 to 2016.
0%
5%
10%
15%
20%
25%
30%
35%
Shareholder's Fund
-50%
0%
50%
100%
150%
200%
250%
300%
350%
FixedAssets

Interpretation: The above diagram shows that there is a positive trend in an
investment from both the company from 2012 to 2016 Tata power is aggressive in
investment. There is 12% growth rate in his books of the account while in the case of
reliance it is just 7% CAGR.
Interpretation: Above diagram shows that how ineffective the company is in
handling their short-term debt and even they are not capable of managing the short-
term fund to deal with day to day activity. Tata power in this case facing more
problem than reliance power from 2012 to 2016.
0%
10%
20%
30%
40%
50%
60%
70%
Investments
-800%
-700%
-600%
-500%
-400%
-300%
-200%
-100%
0%
Net CurrentAssets

Chapter 5: Valuation of Companies
5.1 Discounted Cash Flow
5.1.1 Assumptions of DCF:
 For finding the cost of Equity and market return I have taken year on year
weekly stock price movement.
 The risk-free rate is of 2017 bond rate which is 8.43% and to have an actual
calculation I have deducted tax rate on it. (Tax rate 30%)
 WACC calculated for the year 2016.
 The growth factor to estimate future free cash flow is derived from Net sales.
All amount is in Lakhs including a number of shares.
NHPC: (National Hydroelectric Power Corporation)
Risk-free rate 8.43%
Risk-free rate after
tax 5.90%
Rm 0.00%
Beta 0.043192
Cost of Equity 5.65%
Ke 5.67%
Kd 16%
%E/(E+D) 56.3%
%D/(E+D) 43.7%
tax rate 24%
WACC 8.52%

Determining FCFF: (Amount in Lakhs)
OUTPUT - FCFF
from net income 2012 2013 2014 2015 2016
Net Income 271750 217221 97879 212447 244014
Depreciation
expense 89386 96929 121076 142587 145214
Interest expense
(1-tax rate) 27000 29360 64602 90445 84646
FCInv -278817 -208375 -179647 -163233 -206913
WCInv 122483 128903 -127147 60516 -7876
FCFF 231802 264039 -23237 342762 259085

Years FCFF PV
2012 ₹ 2,31,802
2013 ₹ 2,64,039
2014 -₹ 23,237 Future FCFF Growth rate = 5.86%
2015 ₹ 3,42,762 Terminal Growth rate = 3%
2016 ₹ 2,59,085
Enterprise value of future
cash flow ₹ 52,43,350
2017E ₹ 2,74,630 ₹ 2,53,059 less: net debt ₹ 1,77,492
2018E ₹ 2,91,107 ₹ 2,47,174
Amount available to equity
holder ₹ 50,65,858
2019E ₹ 3,08,574 ₹ 2,41,425 no. of equity 110706.7
2020 ₹ 3,17,831 ₹ 45,01,692 value of per share ₹ 45.76
Interpretation: The reason behind the decline in cash flow in the year 2014 is
because of continual improvement in capital expenditure and change in working
capital. When I started to evaluate the value of stock the price of the share is Rs.
30.25. While considering normal growth rate and terminal growth rate the value of
enterprise get converted to present value and the intrinsic value Share comes to
Rs.45.76. The marginal growth in the value of share which is 51.25% that shows that
stock has potential to earn more return by which it is advisable that investor can BUY
or HOLD this stock.

NLC: (Neyveli Lignite Corporation)
Rf 8.24%
Rf after tax 5.77%
Rm 0.66%
Beta 0.022024684
Ke 5.66%
%E/(E+D) 80.59%
Kd 18%
%D/(E+D) 19.41%
tax rate 37.48%
WACC 6.71%

OUTPUT - FCFF
from net income 2012 2013 2014 2015 2016
Net Income 135573 134473 155149 135063 122189
Depreciation expense 43018 51231 51728 44062 59923
Interest expense
(1-tax rate) 10638 13787 12345 9918 11777
FCInv -151202 -179219 -204299 -219519 -157150
WCInv 156358 42086 -200644 1155 2189
FCFF 194386 62358 -185721 -29321 38929

Years FCFF PV
2012 ₹ 1,94,386
2013 ₹ 62,358
2014 ₹ -1,85,721 Future FCFF Growth rate = 8.17%
2015 ₹ -29,321 Terminal Growth rate = 4%
2016 ₹ 38,929
cash flow ₹ 16,79,864
2017E ₹ 42,119 ₹ 39,472 less: net debt ₹ 1,28,561
2018E ₹ 45,570 ₹ 40,023
holder
₹ 15,51,303
2019E ₹ 49,304 ₹ 40,581 no. of equity 16777.096
2020 ₹ 51,277 ₹ 15,59,788 value of per share ₹ 92.47
Interpretation: Free cash flow is the medium to find out the actual inflow and
outflow of the firm. When I started to evaluate the value of stock. The price of the
share is Rs. 96.85. The enterprise value which is Rs.16,73,864 Lakh is the summation
of the present value of estimated future cash flow and the intrinsic value of Share
comes to Rs.92.47 which comes from estimating future four years. From the
calculation, there is a decrease in intrinsic value that means share is overpriced which
is approximately 4.52% show on the basis of that this stock is not valuable for future
by which it is advisable that investor can SELL this stock.

Reliance Power:
Rf 8.24%
Rf after tax 5.77%
Rm 0.66%
Beta 0.055998084
Ke 5.48%
%E/(E+D) 93.82%
Kd 22%
%D/(E+D) 6.18%
tax rate 0.34%
WACC 6.49%

OUTPUT - FCFF
from net income 2012 2013 2014 2015 2016
Net Income ₹ 31,086 ₹ 10,624 ₹ 5,648 ₹ 2,510 ₹ 40,274
Depreciation expense ₹ 293 ₹ 314 ₹ 1,601 ₹ 1,987 ₹ 1,711
Interest expense(1-tax
rate) ₹ 6,032 ₹ 2,208 ₹ 10,614 ₹ 16,818 ₹ 16,148
FCInv -₹ 853 -₹ 1,788 -₹ 2,675 -₹ 2,751 -₹ 58
WCInv ₹ 5,247 -₹ 1,259 -₹ 1,339 ₹ 7,171 ₹ 762
FCFF ₹ 41,805 ₹ 10,100 ₹ 13,849 ₹ 25,735 ₹ 58,837

Years FCFF PV
2012 ₹ 41,805
2013 ₹ 10,100
2014 ₹ 13,849 Future FCFF Growth rate = 7%
2015 ₹ 25,735 Terminal Growth rate = 3%
2016 ₹ 58,837
cash flow
₹ 19,20,341
2017E ₹ 62,720 ₹ 58,899 less: net debt ₹ 23,279
2018E ₹ 66,860 ₹ 58,962
holder
₹ 18,97,062
2019E ₹ 71,272 ₹ 59,024 no. of equity 28051
2020 ₹ 73,410 ₹ 17,43,456 value of per share ₹ 67.63
Interpretation: While calculating the intrinsic value of share the current share price
was Rs.45.25 and while calculating beta I have taken the sensitivity movement of
stock with S&P BSE power. The decrease in cash flow from the year 2013 and 2014
is due to Increase in capital expenditure and change in working capital. The present
enterprise value of estimated future cash flow comes to Rs.19,20,341 Lakh and the
number of equity is 28051 Lakh by which the intrinsic value comes to Rs.67.63 that
means the stock is undervalued and it has potential to generate income for investor
which would be 49.45% so, I would recommend investor HOLD or BUY this stock.

TATA Power:
Rf 8.24%
Rf after tax 5.77%
Rm 0.66%
Beta 0.041262743
Ke 5.56%
%E/(E+D) 70.36%
Kd 13%
%D/(E+D) 29.64%
tax rate 33.85%
WACC 6.38%

FCFF from
net income 2012 2013 2014 2015 2016
Net Income ₹ 1,16,973 ₹ 1,02,469 ₹ 95,408 ₹ 1,01,029 ₹ 92,143
Depreciation
expense ₹ 57,035 ₹ 36,410 ₹ 58,714 ₹ 57,529 ₹ 66,565
Interest
expense
(1-tax rate) ₹ 35,788 ₹ 41,172 ₹ 55,550 ₹ 69,821 ₹ 76,465
FCInv -₹ 65,299 -₹ 81,554 -₹ 1,10,095 -₹ 1,25,614 -₹ 1,04,167
WCInv ₹ 3,02,346 ₹ 2,35,114 -₹ 43,633 -₹ 52,677 -₹ 4,404
FCFF ₹ 4,46,843 ₹ 3,33,611 ₹ 55,944 ₹ 50,088 ₹ 1,26,602

Years FCFF PV
2012 ₹ 4,46,843
2013 ₹ 3,33,611
2014 ₹ 55,944 Future FCFF Growth rate = 5%
2015 ₹ 50,088 Terminal Growth rate = 2%
2016 ₹ 1,26,602
Enterprise value of future cash
flow
₹ 32,02,955
2017E ₹ 1,32,933 ₹ 1,24,957 less: net debt ₹ -1,18,845
2018E ₹ 1,39,579 ₹ 1,23,332
holder
₹ 33,21,800
2019E ₹ 1,46,558 ₹ 1,21,729 no. of equity 27046.294
2020 ₹ 1,49,489 ₹ 28,32,937 value of per share ₹ 122.82
Interpretation: The above table shows that detailed description to find free cash
flow for the firm. When the intrinsic value get calculated the price of the share was
Rs.81.55 and after the calculation, the intrinsic value comes to Rs.122.82 which is
after evaluating four years from 2017 to 2020 by which it is clearly identifiable that
the stock is undervalued and it has profit generating capacity which is around 50.60%.
So, I would recommend that investor should BUY and HOLD this stock.

5.2 Relative Valuation:
SHARE PRICE
(RS)
Enterprise value
(in Lakh)
NHPC 24.10 4496004.108
NLC 96.85 1764447.748
RELIANCE POWER 45.25 2182856.75
TATA POWER 81.55 3155578.274
Price/Book value
NHPC 0.93
NLC 1.05
RELIANCE POWER 0.78
TATA POWER 1.46
Industry Average 1.05
Interpretation: The price to book value is used to compare stock’s market price with
its book value by dividing the closing stock price with its latest quarter book value.
From the above table is identifiable that NHPC and Reliance power has a lower value
when it gets compare with industry average which is 1.05 that means both stocks is
undervalued while in the case of NLC and Tata Power it is overvalued.

EV/REVENUE
2016 2017(ES)
NHPC 6.05 5.71
NLC 2.65 2.45
RELIANCE
POWER 255.66 150.35
TATA POWER 3.58 3.54
Industry Average 66.98 40.51
Interpretation: This comparable shows what is a company being valued per each
Rupee of revenues? In this, the price of reliance power is quoted as overvalued when
the industry average is demanding 66.98. In the same manner, the NHPC, NLC and
Tata power has potential to earn as this stock is undervalued.

EV/EBITDA
2016 2017(ES)
NHPC 7.808667 7.416236
NLC 6.435245 6.279223
RELIANCE
POWER 37.42382 33.49328
TATA
POWER 9.816273 9.456024
Industry
Average 15.37 14.16
Interpretation: The enterprise value by EBITDA indicate how much is each Rupee
of EBITDA worth to investors? The numerator of the formula, the EV, is calculated
as the company’s total market capitalization and preferred shares and debt, minus
total cash. In this case, the value of NHPC, NLC and Tata power is undervalued when
Industry benchmark is 15.37. While in opposite case the value of Reliance power gets
overvalued.

5.3 Ratio Analysis:
5.3.1 Profitability Ratios
Interpretation: Return on Capital Employed indicates how much company is being
able to generate operating profit while deploying a different form of capital that is
Equity and Debt. ROCE is very useful in the capital intensive sector like utilities and
telecoms. From the above diagram, it is visible that there is an increase in industry
benchmark over last five year that is 11% CAGR and on the basis of that Reliance
power growth with the CAGR of 3% while in the case of other three companies that
growth is CAGR of -3% on ROCE.
0
2
4
6
8
10
12
14
16
Mar '12 Mar '13 Mar '14 Mar '15 Mar '16
ROCE(%)
Industry Reliance Power Tata Power
NLC NHPC Linear (Industry)

Interpretation: Return on Net worth is calculated as when net income (PAT) get
divided by shareholder capital plus reserve & surplus. This indicates that how many
shareholders could receive on their investment in the company if all profit earned
were passed directly to them. From the above diagram, it is identifiable that the
reliance power is performing well that over last five year the ROCE is grown CAGR
of 5% that means reliance is efficient in utilising shareholder fund while other stock
and industry benchmark showing insignificance growth.
Interpretation: Return on Assets State that whatever capital expenditure incurred by
the company how effective it is generating net income for the company and it is a
useful measure to identify whether the Assets up to the mark or not. In this diagram,
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Return on Networth(%)
0.00
20.00
40.00
60.00
80.00
100.00
Return onAssets

the return on assets of NLC India overvalued and NHPC is undervalued but both the
company having positive CAGR that is 5% and 4% respectively. While in the case of
reliance power the growth in ROA is 0.64% CAGR from 2012 to 2016.
Liquidity and Solvency Ratios
Interpretation: current ratio act as measures that help to analyse how liquid the
company is in repaying its short-term liability. This diagram indicates that NLC &
NHPC is very sound in paying short-term obligation while reliance power and Tata
power is failed to meet even industry benchmark.
0
0.5
1
1.5
2
2.5
3
3.5
4
Current Ratio

Interpretation: Quick ratio shows the extent of cash and other current assets that are
readily convertible into cash in comparison to the short-term obligations of an
organisation. A quick ratio of 0.5 would suggest that a company is able to settle half
of its current liabilities as soon as possible. From the above diagram, it is identifiable
that reliance power has more cash and cash equivalent in its account to repay short-
term obligation much faster than other competitors same goes with NHPC.
Interpretation: This ratio actually useful to identifying the management efficiency
in recovering its due debt. In other words, the debtor turnover ratio measures how
many times a business can collect its average accounts receivable during the year.
0
20
40
60
80
100
Quick Ratio
0
5
10
15
20
25
30
2012 2013 2014 2015 2016
DebtorTurnover Ratio

Higher efficiency is favourable from a cash flow standpoint as well. If a company can
collect cash from customers sooner, it will be able to use that cash to pay bills and
other obligations sooner. In this diagram private companies that reliance power and
Tata power has more control on receivables that of NHPC & NLC.
Interpretation: Working Capital cycle (WCC) refers to the time taken by an
organisation to convert its net current assets and current liabilities into cash. It reflects
the ability and efficiency of the organisation to manage its short-term liquidity
position. In other words, the working capital cycle (calculated in days) is the time
duration between buying goods to manufacture products and generation of cash
revenue on selling the products. The shorter the working capital cycle, the faster the
company is able to free up its cash stuck in working capital. If the working capital
cycle is too long, then the capital gets locked in the operational cycle without earning
any returns. Therefore, a business tries to shorten the working capital cycles to
improve the short-term liquidity condition and increase their business efficiency. In
this ratio lower will be the most efficient company in recovering its money. Industry
benchmark showing a downward trend that means the industry as a whole is getting
money on a later date while in this case Reliance power and Tata power has a shorter
span of days of working capital than NHPC & NLC.
-50
0
50
100
150
200
250
300
350
400
Number of Days In Working Capital

Chapter 6: Conclusions
 Indian power sector is experiencing massive change that has reinvented the
industry outlook. Persistent economic growth keeps driving electricity
demand in India. The government’s aim of attaining ‘Power for all’ has
accelerated capacity addition in the country. Expansion in industrial activity
coupled with growing population and increasing penetration and per-capita
usage will boost demand for electricity. Increasing foreign, as well as
domestic investments across the value chain, is also providing further impetus.
The Renewable Energy sector got some positive inputs from Union Budget
where Finance Minister proposed to reduce Customs and Excise duties on
several items related to the Sector.
 From this project the main noticeable factor is that the technique by which
company use to influence the investor to invest in their company. While
completing the project the identifiable things is that, what is the market
sentiment? And the power of predicting future cash flow of a company. The
major drawback in valuing stock is that, assumption based analysis because,
there is huge difference in assumption and the real scenario in which company
operating its business activity.
 It is very difficult to find the intrinsic value while evaluating free cash flow of
firm and a research analyst can manipulate the data in order to make a stock
of the company more attractive.
 The Project conclude that NHPC is under performing when power sector
showing positive result while when profit is concern majority of business has
shifted to the private company like Tata power and Reliance power.
 The technique in the project shows contradicting statements of evaluating the
stock. The Data in project conclude that no other method is useful if company
is not in the moat of its business activity. The price and the value of stock get
determined by the belief that the retail investor create in their mind.

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