NHPC share price jumps over 8% even as brokerages have mixed views on its prospects
- JM Financial maintains a 'buy' rating on NHPC, with an increased target price of ₹91, while Kotak Institutional Equities downgrades the stock to 'sell' with a target price of ₹60.
Brokerage houses are divided on NHPC in response to the third-quarter results of the Indian public sector hydropower provider. With an increased target price of ₹91, up about 6% from the prior target price of ₹86, JM Financial is still recommending NHPC as a "buy." Additionally, the brokerage believes that the stock has over 12% potential. On the other hand, Kotak Institutional Equities has revised its target price for NHPC stock to ₹60 per share and downgraded it from 'Add' to'sell'.
Due to rising expenditures, the state-owned NHPC reported on Monday a 19% decline in its consolidated net profit for the quarter ended December, to ₹628.44 crore.
According to the company's exchange statement, the hydropower generator recorded a net profit of ₹775.99 crore for the October-December 2022–2023 period.
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Additionally, the company's total income decreased from ₹2,691.34 crore a year earlier to ₹2,549.69 crore during the quarter.
In the reviewed quarter, expenses increased to ₹1,727.85 crore from ₹1,303.06 crore during the third quarter of the previous fiscal year.
According to broker JM Financial, the Teesta River flash floods in October 23 caused material damage and resultant business loss in Teesta-3, Teesta-4, and Teesta-5 power facilities. These losses are mostly recoverable post-insurance settlement, which is anticipated by Q1FY25. This explains the underperformance and extreme variance.
“With a dividend yield of 2.5%, and nation’s priority to enhance hydropower due to its load following ability for grid balancing and pumped hydro storage in place, we continue to maintain our BUY rating on the ‘only’ large utility with 100% green energy portfolio with a target price of ₹91/sh,” said JM Financial in its report.
On the other side, Kotak Institutional Equities in its report, also highlighted that the Teesta river basin flash floods affected three power plants with a combined capacity of 802 MW, or 15% of the operational standalone capacity. This resulted in poor generation of 2.6 BUs (-28% yoy) and lower income. The impact on earnings was more severe since NHPC had to account for increased costs of ₹340 crore, which were offset by ₹300 crore in other revenue from possible insurance claims.
The brokerage sees limits on profits growth beyond Subansiri and Parbati II and argues that hydro projects have historically had excessive delays in commissioning owing to execution issues.
“We downgrade NHPC to SELL (from ADD), owing to the sharp stock performance in the past quarter (56%), taking valuations to 2X P/B and 16X P/E on FY2025E. We raise FV to ₹60/share (from ₹55/share), owing to the rollover to March 2026 valuations and giving credit for the money spent on underconstruction projects,” the brokerage said.
NHPC share price
The NHPC share price today surged over 8% after seeing a fall of over 15% in Monday's session post-Q3 results. The NHPC share price opened at ₹80.73 apiece on BSE. The NHPC stock price touched an intraday high of ₹87.83 and an intraday low of ₹77.38.
According to Ruchit Jain, Lead Research Analyst at 5paisa, the PSU stocks have corrected sharply in the last couple of sessions due to profit booking. Although the longer-term trend for NHPC is up, the stock could trade with higher volatility in the near term. Major support is seen around Rs. 70, and any declines towards this support in the near future would be a good buying opportunity.
Similarly, Rajesh Bhosale, Technical Analyst at Angel One stated that the stock has been in buzz since last few months however since last few sessions prices have come under pressure mainly due to profit booking. Today the bulls have again picked momentum up 7%.
“We have a positive view on the stock, but in the near term volatility may remain high; support is seen around ₹80, whereas resistance is ₹95,” said Bhosale.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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