Due to rising expenses, the state-owned NHPC on Monday reported a 19% decline in its consolidated net profit for the quarter ended December, to ₹628.44 crores.
According to the company’s exchange statement, the hydropower generator recorded a net profit of ₹775.99 crore for the period October-December 2022–2023.
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Moreover, the company’s total revenue decreased from ₹2,691.34 crore a year earlier to ₹2,549.69 crore during the quarter.
In the quarter under review, expenses increased to ₹1,727.85 crores 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 resulting business loss in Teesta-3, Teesta-4, and Teesta-5 power facilities. These losses are largely recoverable post-insurance settlement, which is expected by Q1FY25. This explains the underperformance and extreme variance.
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“With a dividend yield of 2.5%, and the nation’s priority to improve hydropower due to its load following capacity 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,” JM Financial said in its report.
On the other hand, Kotak Institutional Equities in its report, also emphasized that the flash floods of the Teesta river affected three power plants with a combined capacity of 802 MW, or 15% of the operational stand-alone capacity. This resulted in poor generation of 2.6 BUs (-28% yoy) and lower revenue. The impact on earnings was more severe as NHPC had to account for increased costs of ₹340 crore, which was offset by ₹300 crore in other income from potential insurance claims.
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The brokerage sees limits to profit growth beyond Subansiri and Parbati II and argues that hydro projects have historically had excessive delays in commissioning due to execution issues.
“We downgrade NHPC to SELL (from ADD), given the sharp stock performance last quarter (56%), taking valuations to 2X P/B and 16X P/E in FY2025E. We raise FV to ₹60/share (from ₹55/share), due to the carryover to March 2026 estimates and credit for the money spent on under-construction projects,” the brokerage said.
NHPC share price
NHPC’s share price today rose more than 8% after seeing a fall of more than 15% in Monday’s session following Q3 results. The share price of NHPC opened at ₹80.73 apiece on BSE. The share price of NHPC touched an intraday high of ₹87.83 and an intraday low of ₹77.38.
According to Ruchit Jain, Senior Research Analyst at 5paisa, the PSU stocks have corrected sharply in the last two sessions due to profit booking. Although the longer-term trend for NHPC is up, the stock could trade with higher volatility in the near term. Major support is seen around Rs. 70, and any decline to this support in the near future would be a good buying opportunity.
Similarly, Rajesh Bhosale, Technical Analyst at Angel One stated that the stock has been in a buzz since the last few months, however since the last few sessions, prices are suppressing mainly due to profit booking. Today the bulls again gained momentum up 7%.
“We have a positive view on the stock, but near-term volatility may remain high; support is seen all around ₹80, while resistance is ₹95,” said Bhosale.
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Published: 13 Feb 2024, 11:40 IST
(tagsTo Translate)NHPC