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.
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 on 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 the 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.
Factors Influencing Performance
Page Industries acknowledged that the Indian apparel retail sector is facing short-term headwinds due to dampened consumer sentiment. However, the company remains optimistic about long-term growth prospects, driven by economic expansion, urbanization, and rising disposable incomes.
The company sees athleisure and innerwear segments as pivotal growth drivers, supported by the expansion of organized retail and e-commerce.