NHPC share price jumps 8.5% to touch 52-week high on CERC’s favourable draft tariff regulations

NHPC share price jumped 8.5% to touch 52-week high on Friday's session after the Central Electricity Regulatory Commission's (CERC) announcement of the Draft Tariff Regulations for 2024–2029, which increased the ROEs for pumped hydro storage and run-on rivers with pondage from 16.5% to 17%, according to brokerage ICICI Direct Research. The NHPC share price today opened at an intraday low of ₹70.10 apiece and touched an intraday high of ₹75 apiece on BSE. 

According to the brokerage, the regulations are favourable for hydro generating companies such as NHPC, which will invest in pumped hydro projects and capacities that will be commissioned on a pondage basis, from both a segment and stock standpoint.

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The company recently announced in an exchange filing that it signed a memorandum of understanding (MoU) with Gujarat Power Corporation Limited (GPCL) during the Vibrant Gujarat Global Summit, 2024, for a proposed investment of Rs. 4,000 crore in the Kuppa Pumped Storage Project (750 MW), Chhota Udaipur, Gujarat. The proposed year of investment commencement is 2024–25.

For the second straight session, NHPC stock price has increased; over the past two sessions, it has increased by roughly 6.5%.The NHPC stock price increased by 81.76% over the previous year, outperforming its sector by 22.05%, according to trendlyne.

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“The broader trend for the stock is positive. The price upmove has been supported by good volumes, and hence, the upmove could continue. Investors with existing long positions can ride the trend. The 20 DEMA support for the stock is now placed around ₹65,” said Ruchit Jain, Lead Research Analyst at 5paisa.

The other important point that the brokerage highlighted from the CERC draft paper is that the regulated return on equity (ROE) for thermal plants and run-on-river hydro plants is still 15.5%, while it has decreased to 15% for transmission assets. The MCLR of SBI + 350 bps, with a ceiling of 14%, will be the regulated ROE for capital expenditures on emission control equipment. All thermal plants have a normative PAF of 85% and a normative PLF of 85% in order to qualify for an incentive.

Miniratna power company, National Hydroelectric Power Corporation, reported a net consolidated profit of ₹1,693 crore in the September quarter of FY 23-24. Its consolidated net profit stood at ₹1,685.81 crore in the quarter ended September last year. Total income dipped to ₹3,113.82 crore in the reporting quarter from ₹3,477.93 crore recorded in the same period a year ago.

Also Read: NHPC Q2 results: Miniratna power company reports net profit of ₹1,693 crore

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