NHPC shares up 8% after 20% fall in 2 sessions; here’s why

Shares of power generation major NHPC surged 8% in Tuesday's session after falling over 20% in the past two sessions as sentiment was lifted after the public sector hydropower company announced an interim dividend for the financial year 2023-24. Despite a weak third quarter earnings, the board of the state-owned entity has approved an interim dividend at the rate of 14%, or ₹ 1.40 per share, on the face value of ₹10 each for FY24. In the past 12 months, NHPC has declared a total equity dividend of ₹1.85, including ₹0.45 in August 2023 and ₹1.4 in February 2023, while it has paid 23 dividends since September 2010.

The board has fixed February 22, 2024, as record date for the purpose of ascertaining eligibility of shareholders for payment of interim dividend, NHPC said in a BSE filing on Monday.

Early today, NHPC shares opened for the fourth straight session at ₹80.73, down 1.2% against the previous closing price of ₹81.03 on the BSE. However, the stock soon pared losses and climbed 8.3% to hit an intraday high of ₹87.83, while the market capitalisation rose to ₹85,490 crore. The PSU stock has rebounded more than 13% from the day’s low of ₹77.38 amid strong volume, with more than 360 lakh shares changing hands over the counter so far. At the current price, the dividend yield stands at 2.19%.

Last week, NHPC share touched its 52-week high of ₹115.84 on February 5, while it hit its 52-week low of ₹37.80 on February 27, 2023, registering three-fold growth in its stock price in one year. The stock has witnessed a strong rally in the recent past, surging 68% in six months and nearly 17% in a month.

For Q3 FY24, NHPC reported a 26.77% decline in its consolidated net profit at ₹491.90 crore as against ₹671.67 crore in the corresponding period last fiscal. Revenue from operation dropped 20.42% to ₹2,055.50 crore as against ₹2,582.76 crore in the year-ago period.

According to domestic brokerage JM Financial, underperformance and sharp variance in Q3 were due to flash floods in river Teesta (Oct’23) resulting in material damage & consequential business loss (INR ₹490 crore) in Teesta- 3,4,5 power stations, both of which are majorly recoverable post insurance settlement expected by Q1FY25.

“With significant hydro capacity addition expected by FY26/FY27 (800 MW Parbati-II, 2000MW Subansiri Lower, 120MW Rangit-IV, 624MW Kiru) and 1135MW Solar, the installed capacity with regulated return is set to grow 50% by FY26/FY27, after a gap of 3 years resulting in Revenue/EBITDA/PAT CAGR of 20%/24%/11% over FY23-26E,” it says in a report.

The brokerage house maintained ‘BUY’ rating on the ‘only’ large utility with 100% green energy portfolio’ with a target price of ₹91, citing the government’s priority to enhance hydropower due to its load following ability for grid balancing and pumped hydro storage in place.

As per the report, NHPC has commissioned 380 MW solar power project at Neemba, Fatehgarh, Raj, making a cumulative commissioned capacity of 700 MW out of a total 2000 MW awarded earlier. Additionally, NHPC has awarded 3,000 MW inter-state transmission system (ISTS) connected solar power projects to 8 developers with a discovered tariff of ₹2.52/unit for 250 MW and ₹2.53/unit for 2,750 MW.

Besides, NHPC signed a pact with Andhra Pradesh Power Generation Corp (APGENCO) for implementation of two identified pumped hydro storage projects namely Kamlapadu-950 MW and Yaganti-1000 MW PSPs in the first phase.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)