Stock Analysis & Valuation Public Joint-Stock Company Federal Hydro-Generating Company - RusHydro (HYDR.L)

• Previous Close: £0.53
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	-100
Intrinsic value (DCF)	3.19	502
Graham-Dodd Method	1.00	89
Graham Formula	2.10	296

Strategic Investment Analysis

Company Overview

Public Joint-Stock Company Federal Hydro-Generating Company - RusHydro (HYDR.L) is a leading Russian hydroelectric power generation company listed on the London Stock Exchange. As one of the largest hydroelectric power producers in Russia, RusHydro operates a vast portfolio of hydroelectric plants, contributing significantly to the country's renewable energy sector. The company plays a crucial role in Russia's energy infrastructure, providing clean and sustainable electricity. With a revenue of RUB 510.3 billion in FY 2023, RusHydro demonstrates strong operational capabilities despite geopolitical challenges. The company's focus on hydroelectric power positions it as a key player in the transition towards greener energy sources in Russia. However, its operations are heavily influenced by domestic energy policies and regulatory frameworks.

Investment Summary

RusHydro presents a mixed investment profile. On the positive side, the company benefits from its dominant position in Russia's hydroelectric sector, with substantial revenue (RUB 510.3 billion in FY 2023) and a beta of 1.1, indicating moderate market sensitivity. However, the lack of dividends (RUB 0 per share) and high total debt (RUB 356.5 billion) raise concerns about financial flexibility. Additionally, geopolitical risks and regulatory uncertainties in Russia could impact future performance. The company's capital expenditures (RUB -192.7 billion) suggest ongoing investments, but the overall attractiveness is tempered by macroeconomic and political risks.

Competitive Analysis

RusHydro holds a competitive advantage as Russia's largest hydroelectric power producer, benefiting from economies of scale and government support in the renewable energy sector. Its extensive infrastructure and operational expertise provide a strong market position. However, the company faces challenges from regulatory constraints and dependence on domestic energy policies. Unlike global peers, RusHydro's operations are geographically concentrated, limiting diversification. The competitive landscape in Russia includes state-owned and private energy firms, but RusHydro's specialization in hydroelectric power differentiates it from conventional fossil fuel-based generators. The company's ability to maintain its competitive edge hinges on continued government backing and efficient capital allocation, particularly in upgrading aging infrastructure.

Major Competitors

• Gazprom Energoholding (OGZD.L): Gazprom Energoholding is a major competitor in the Russian energy sector, with a diversified portfolio including thermal and hydroelectric power. Its strength lies in its integration with Gazprom's vast natural gas resources, providing fuel supply stability. However, its reliance on fossil fuels contrasts with RusHydro's renewable focus, making it less aligned with global green energy trends.
• TGC-1 (TGKA.ME): TGC-1 operates in both thermal and hydroelectric power generation in Russia. While it has a smaller hydro capacity compared to RusHydro, its regional presence in Northwest Russia provides localized market strength. Its weakness includes higher exposure to thermal generation, which is less sustainable long-term compared to RusHydro's hydro-centric model.
• Inter RAO (IRAO.ME): Inter RAO is a key player in Russia's energy sector, with operations in generation, distribution, and exports. Its international presence gives it an edge in diversification, but its reliance on non-renewable sources and complex corporate structure may hinder operational efficiency compared to RusHydro's streamlined hydro focus.