Regulated equity to increase 35 %, despite Subhanshiri project being on hold NHPC is targeting commercialization of the 330MW Kishanganga project from January 2018 and the 800MW Parbati-II project from December 2018. These two projects will increase AES in capacity by 19 % and attributing regulated equity (ARE) by 35 %. The 2,000MW Subhanshiri project remains on hold for now. Under-recoveries to decline on natural attrition and approval of five tariff orders O&M under recoveries have peaked, in our view. Wage bill growth will be muted due to high natural attrition, while existing manpower can manage new projects. We expect approval of capex for the five projects over the next few years, which can boost recurring PAT by INR1.5b. Higher dividend payout is boosting RoE; room for even higher payout/buyback Capital allocation has improved with a payout of INR113b in four years. Debtor days have come down after the implementation of the UDAY scheme for DISCOMs. Net worth (NW) in non-core business has dropped from 51 % to 36 %, and RoE has improved from 8.7 % to 9.9 % over FY13-17. Another 32 % of NW can be paid out, which is not deployed in core business