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Business News/ Markets / Stock Markets/  NHPC share price surges 8% after announcing interim dividend; buy, sell or hold?
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NHPC share price surges 8% after announcing interim dividend; buy, sell or hold?

Over the past month, shares of this hydropower company have soared by 24 percent, a stark comparison to the benchmark Sensex, which experienced a decline during the same period.

NHPC Limited Premium
NHPC Limited

NHPC shares witnesses an impressive 8.4 percent surge following the company's declaration of an interim dividend of 1.4 per share for the fiscal year 2023-24, on Tuesday's trading session.

Despite facing challenges in the third quarter, analysts maintain a positive outlook on the stock, largely due to its attractive 2.5 percent dividend yield.

Also read: BFSI Q3 review: Large private banks better placed than others, says Anand Rathi; prefers ICICI Bank, SBI among others

Over the past month, shares of this hydropower company have soared by 24 percent, a stark comparison to the benchmark Sensex, which experienced a decline during the same period.

NHPC reported a decline of 14 percent in consolidated revenue and a 26 percent drop in profit for the December quarter compared to the previous year, attributing this downturn to the adverse effects of flash floods in the Teesta River, resulting in damages and business interruptions.

The impact on earnings was further exacerbated as NHPC incurred additional expenses amounting to 34 crore. However, there was a partial offset with the potential receipt of 30 crore from insurance claims, contributing to other income.

Also read: Profit of Indian public sector banks surged by 40% in first nine months of FY24; check top performing lenders

Analyst at Elara Securities India downgraded the NHPC stock from ‘Buy’ to ‘Reduce’, raising the target price to 77.

“We revise NHPC to Reduce from Buy due to the recent stock price appreciation, but we continue to remain positive on the stock given: 1) high dividend yield and 2) growth post commissioning of Parbati II/Subansiri projects. We revise earnings estimates for FY24E/26E. We revise our TP to 77 (from 60) on 2.0x FY26E regulated equity," the brokerage firm said.

Meanwhile, another brokerage firm Kotak Institutional Equities also downgraded the stock from ‘Add’ to ‘Sell’. "We highlight that hydro projects have traditionally seen inordinate delays in commissioning due to execution challenges, and we see constraints on earnings growth beyond Subansiri and Parbati II," the brokerage firm said.

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Published: 13 Feb 2024, 05:20 PM IST
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