NHPC stock rises over 5% after CLSA upgrades to ‘high conviction outperform’; Do you own?

Indian public sector hydropower company NHPC share price rallied over 5 per cent on Thursday’s trading session after brokerage firm CLSA upgraded the share to ‘high conviction outperform’. Previously, the firm had already assigned an “outperform” rating to the stock.

CLSA has set a price target of ₹117 for the stock, slightly reduced from its previous target of ₹120.

The brokerage anticipates NHPC shares to double within the next four years, highlighting that the recent 25 per cent decline over the past six months presents an attractive buying opportunity for investors.

NHPC’s expansion plans

According to CLSA, the commencement of the Parbati 2 Hydro Project led to a 27% increase in regulated equity during the first quarter of the financial year.

Additionally, NHPC aims to expand into the shorter-duration regulated pumped storage sector, with plans to invest ₹84,000 crore to develop 20 GW of pumped storage capacity.

CLSA anticipates NHPC’s regulated equity to double between FY24 and FY28, as the completion of major projects is expected to drive the company’s Earnings Per Share (EPS) growth in the coming years.

NHPC shares have declined 37 per cent from its peak of ₹118. On Monday, the stock was trading 4 per cent higher at ₹77.75. However, it has fallen 5 per cent in the first two months of the year.

NHPC to decide to acquire shares in PTC

NHPC Ltd is set to make a decision soon regarding the acquisition of shares in power trading giant PTC India from other public sector entities. The state-run company will communicate its decision to the power ministry, according to NHPC Chairman and Managing Director Raj Kumar Chaudhary.

“We currently have about 4% equity share, and the other companies also have about 4% each. A few of the companies want to exit. NHPC was asked whether it is also interested in exiting. So, we have said that we are not interested in exiting the PTC shareholding…We will continue our investment in PTC. But the question remains whether we are going to increase our holding in the company,” Chaudhary said.

“We are discussing the matter within our organization, and very shortly, we will let the power ministry know whether we want to increase our holding in PTC,” he added.