Top 3 Hydropower Stocks in India to Watch Out for in 2025

• "Great things are done by a series of small things brought together." - Vincent Van Gogh

This quote beautifully reflects India's determined steps toward sustainability.

Among its key initiatives, hydropower has emerged as a vital player in addressing energy security, environmental concerns, and economic growth.

In September 2024, the government approved Rs 124.6 billion (bn) to develop 31,350 MW of hydropower capacity by FY32. This scheme focuses on infrastructure development - transmission lines, roads, and bridges - to overcome challenges faced in remote projects.

The government has also introduced supportive measures. These include the Hydro Power Purchase Obligations (HPO) and the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI).

These efforts are aimed at driving innovation and fostering growth in the renewable energy sector. By encouraging pumped storage projects and rationalising tariffs, these schemes pave the way for large-scale investments while ensuring affordability.

Additionally, the focus on remote and hilly regions creates a dual impact. It not only accelerates project development but also generates significant employment opportunities.

Local economies benefit through direct and indirect jobs, as well as entrepreneurship in transportation, tourism, and small-scale businesses.

With such robust measures, the hydropower sector is set to thrive. Let's take a closer look at the top 3 hydropower stocks in India.

These stocks are filtered using Equitymaster's vast list of hydropower stocks and further ranking them on the basis of their marketcap.

Take a look...

#1 NTPC

First on the list is NTPC.

NTPC along with its subsidiaries/associates & JVs is primarily involved in the generation and sale of bulk power to state power utilities. Other businesses of the group include providing consultancy, project management & supervision, energy trading, oil & gas exploration, and coal mining.

The company is one of India's largest energy producers, with a total commercial capacity of 76,443 MW, including 59,168 MW on a standalone basis as of September 2024.

NTPC is also heavily investing in Pumped Storage Projects (PSP) to enhance renewable energy storage. Currently, 1 GW of PSP is under development, with orders for an additional 2.8 GW in Tamil Nadu and Maharashtra.

The company has planned another 4.2 GW of PSP, bringing the total planned capacity to approximately 8 GW under NTPC Green Energy Limited.

It's also entering the nuclear energy space with significant projects like the Mahi Banswara nuclear power project (4 x 700 MW), which is expected to commence concrete work by March 2026. The first unit is projected to achieve criticality by FY32.

The company is also forming strategic partnerships to scale renewable energy projects. For example, NTPC has collaborated with the Rajasthan government to develop 25 GW of renewable energy capacity and with MAHAPREIT to establish 10 GW of renewable energy parks in Maharashtra.

NTPC's financial performance remains robust. In H1 FY25, NTPC reported a profit after tax (PAT) of Rs 108.9 bn, reflecting a growth of 15.2% compared to H1 FY24. This growth is largely attributed to operational efficiencies and increased capacity utilisation.

Similarly, the net revenue grew by 6.1%, reaching Rs 941.8 bn in H1 FY25, driven by higher power generation and better coal availability.

Looking ahead, NTPC aims to achieve 60 GW of renewable energy capacity by FY32, incorporating solar, wind, and energy storage solutions. It is also exploring green hydrogen and other sustainable energy initiatives to contribute to India's net-zero carbon emissions goal by 2070.

To know more about the company, check out NTPC's factsheet and its latest quarterly results.

#2 Tata Power

Next on the list is Tata Power.

Tata Power has transformed into India's undisputed energy powerhouse. The company is involved in everything-generating electricity, transmitting it across the country, distributing it to homes and businesses, and even trading power.

Its generation segment comprises of generation of power from hydroelectric sources and thermal sources (coal, gas and oil) from plants owned and operated under lease arrangement and related ancillary services.

Its pumped hydro initiatives have gained momentum. The first 1,000 MW pumped hydro project has received board approval and will commence work in January 2025. This project has already secured most of the necessary approvals, with full-fledged construction activity set to start soon.

Additionally, Tata Power is advancing an 1,800 MW pumped hydro project at Shirawta, which is expected to begin construction by mid-2025, subject to remaining approvals.

The company is also involved in international projects, such as a 600 MW hydropower project in Bhutan. Work on this project is progressing, with the diversion tunnel already under construction. It aims to achieve financial closure and ramp up construction activities by early 2025.

This Tata group company's renewable energy business complements its hydropower focus. The company plans to add 5 GW of renewable capacity by FY26, with an emphasis on hybrid solar-wind and storage projects.

Coming to financials, Tata Power has demonstrated strong financial growth in H1 FY25. The company's net profit rose by 12.3% to Rs 27.2 bn. This was driven by contributions from its renewable energy cluster, which delivered a significant improvement in profitability.

Similarly, net revenue increased by 9.8% in H1 FY25 reaching Rs 615.4 bn, fueled by the stabilisation of its solar and wind energy projects and growing demand for renewable power. The company's ability to execute large-scale third-party projects also supported revenue growth during the period.

Looking ahead, Tata Power plans to leverage its robust pipeline of renewable and hydropower projects. It aims to deliver integrated solutions by bundling hydropower, solar, and wind with storage options.

This approach supports the company's mission to provide 100% renewable energy to its customers, aligning with India's sustainability goals.

To know more about the company checkout Tata Power's factsheet and its latest quarterly results.

#3 NHPC

Last on the list is NHPC.

NHPC, Government of India's flagship hydroelectric generation company, is involved in the generation and sale of bulk power to various power utilities. Its other business includes providing project management/construction contracts/ consultancy assignment services and trading of power.

NHPC is a cornerstone of India's hydropower sector, with a robust portfolio of ongoing and planned projects. The company achieved power generation of 15,013 m units in H1 FY25, highlighting its operational scale.

Despite challenges such as flash floods affecting the Teesta-V Power Station, NHPC continues to play a critical role in renewable energy. Restoration work for the Teesta-V project is ongoing and is expected to be completed by Q3 FY26.

The Subansiri Lower Project, NHPC's flagship initiative, has achieved 94% physical progress. Three units are expected to be commissioned by March 2025, with the remaining units to follow by May 2026.

Another significant project, the Parbati-II HE Project, has achieved 98% physical progress and is set for commissioning by February 2025.

The Dibang Multipurpose Project, one of NHPC's largest, is under active development with an estimated cost of Rs 318.8 bn and a completion target of February 2032.

Coming to its financial performance, NHPC's net profit declined by 23% in H1 FY25. This was due to reduced generation caused by flash floods and project disruptions.

Total revenue also dropped by 2%, primarily due to a lower generation, although unbilled revenue and insurance recoveries provided some offset.

Looking ahead, NHPC is focused on developing pumped storage projects in multiple states, including Rajasthan, Odisha, and Maharashtra. Pre-Feasibility Reports for these projects are underway, with an emphasis on large-scale storage solutions to support renewable energy integration.

To know more about the company checkout NHPC's factsheet and its latest quarterly results.

In Conclusion

Hydropower remains a critical pillar in India's renewable energy journey. The government's approval of substantial funds emphasises its dedication to clean energy.

This initiative aims to strengthen enabling infrastructure, such as roads, bridges, and transmission lines. It also highlights the focus on overcoming challenges faced by remote projects. These measures will not only drive investments but also ensure energy security for the country.

India's transition to sustainable energy has been further bolstered by initiatives like Hydro Power Purchase Obligations (HPO).

Other programs, such as those encouraging pumped storage projects, are creating a dynamic push toward clean and reliable power generation. The anticipated surge in PSP capacity is from 4.7 GW to about 55 GW by FY32.

The sector's resilience was tested during 2023-24. Flash floods and inconsistent rainfall impacted hydropower generation in various regions.

However, restoration efforts and strategic interventions aim to stabilize operations and prepare for future challenges. By fostering collaboration and prioritizing international projects, companies like NTPC, Tata Power, and NHPC are leveraging their strengths to lead the way in hydropower.

India's hydropower ambitions align with global sustainability commitments, such as the COP Paris Agreement. The sector is not just addressing energy demands but also fostering economic growth through local job creation and entrepreneurship.

Nevertheless, investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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Happy Investing.

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