On February 13, NHPC shares rallied by 8% following the announcement of an interim dividend of Rs 1.4 per share for the fiscal year 2023-24. Despite a challenging third quarter, analysts maintain optimism about the stock due to its 2.5% dividend yield. Over the past month, the hydropower player’s stock has surged by 24%, contrasting with a decline in the benchmark Sensex. NHPC reported a 14% decrease in consolidated revenue and a 26% decrease in profit year-on-year for the December quarter, attributed to damage and business loss resulting from flash floods in the Teesta river.
The earnings impact was notably significant as NHPC recorded additional expenses of Rs 34 crore, partly offset by potential insurance claims totaling Rs 30 crore. JM Financial analysts uphold a “buy” rating on NHPC, setting a target price of Rs 91 per share. In a post-result review note, the brokerage firm stated, “With a dividend yield of 2.5 percent and the nation’s focus on enhancing hydropower for grid balancing and pumped hydro storage, we maintain a bullish stance on the ‘only’ large utility with a 100 percent green energy portfolio.”
NHPC currently has projects totaling 18.7 GW in various stages of implementation. Additionally, it has unveiled pump-storage projects, having inked agreements for 7.3 GW with Maharashtra, while discussions are underway for another 14 GW with different states. Despite this, analysts at Kotak Institutional Equities have downgraded NHPC from “add” to “sell” due to the significant rally in the past quarter, which amounted to 56%, resulting in valuations of 2x P/B and 16x P/E on FY25E.
