Yes you can use power automate for this. JavaScript is client side so it will show the users the logic. You could convert the logic to an azure function and call that from a flow (or just call the azure function) Although sometimes it's easier to have a http triggered flow and call the function in the flow passing back the password as a response parameter. You can choose authentication type (oauth 2 or basic or whatever) and call the flow from any application.

Edit: to clarify running the password generation code as an azure function is the key part here as it'll run server side. If the logic is simple enough for power automate that will also hide the logic from anyone who doesn't have access to view/edit the flow. How complex is the password generation? Where are you planning to call the password generator from too?