NHPC stock surges 8% after firm announces interim dividend

NHPC shares surged 8 percent on February 13 after the company announced an interim dividend of Rs 1.4 a share for the financial year 2023-24.

Despite a weak third quarter, analysts remain bullish on the counter due to a 2.5 percent dividend yield.

The stock of this hydropower player has surged 24 percent in the past month against a percent decline in the benchmark Sensex.

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NHPC's consolidated revenue and profit fell 14 percent and 26 percent year-on-year (YoY) in December quarter as flash floods in river Teesta led to damage and business loss, the company said.

The earnings impact was more pronounced as NHPC has accounted for additional expenses of Rs 34 crore, offset by other income from
potential insurance claims of Rs 30 crore.

Analysts at JM Financial maintain a “buy” rating on NHPC, with a target price of Rs 91 per share.

"With a dividend yield of 2.5 percent, 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 a bullish stance on the ‘only’ large utility with 100 percent green energy portfolio," the brokerage firm said in a post-result review note.

NHPC has projects aggregating 18.7 GW under various stages of implementation. It has also announced pump-storage projects, with agreements signed for 7.3 GW with Maharashtra. Discussions were on for another 14 GW with other states.

Analysts at Kotak Institutional Equities, however, have downgraded NHPC to “sell” from “add” owing to the sharp rally in the past quarter (56 percent), taking valuations to 2x P/B and 16x P/E on FY25E.

"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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