Investment Opportunity in NHPC: A Strategic Move for Competitive Exam Aspirants

Authored by: Abhinav Ranjan
Updated: July 4, 2024 | 07:29 AM IST

Investment Insight: NHPC Stock Recommendation

Market expert Ravi Singh, Senior Vice President of Retail Research at Religare Broking, has recommended a BUY rating on NHPC, a Public Sector Undertaking (PSU) stock. Currently trading around Rs 100, NHPC is projected to reach a target price of Rs 120, offering a potential return of 20%. Singh notes that NHPC shares have been rangebound recently but show strong potential for a breakout after consolidating around Rs 98-100. The stock reached a 52-week high of Rs 117.80 on June 3, 2024.

Historical Context and NHPC’s Strategic Moves

NHPC, a state-run power company, has a significant historical background in India’s energy sector. Established in 1975, NHPC has been instrumental in harnessing hydroelectric power, contributing to India’s energy security and economic growth. Recently, NHPC has expanded its portfolio by signing a 400 MW solar power purchase agreement (PPA) with Jackson Green, a new energy transition platform. This project, located in Rajasthan, will connect to the central grid and is expected to generate clean energy sufficient to power approximately four lakh households annually. The project is slated for commissioning within 24 months, with NHPC purchasing power for 25 years to sell to distribution companies (discoms).

NHPC’s Financial Performance and Dividend History

NHPC is a constituent of the BSE 200 index and has shown remarkable financial performance. As of July 3, 2024, the stock has surged 50% in the last six months and has more than doubled investors’ money in one year, yielding a return of 123%. Over two and three years, NHPC shares have delivered returns of 228% and 285%, respectively.

In terms of dividends, NHPC has consistently rewarded its investors. In February 2024, the company paid a dividend of Rs 1.40 per share. In 2023, dividends were paid twice, amounting to Rs 0.45 in August and Rs 1.40 in February. Similarly, in 2022 and 2021, NHPC paid dividends on two occasions each year, reflecting its commitment to shareholder value.

Market Capitalization

As of July 3, 2024, NHPC commands a market capitalization of Rs 1.03 lakh crore, underscoring its significant presence in the Indian stock market.

Summary in Bullet Points:

• Expert Recommendation: Ravi Singh from Religare Broking recommends a BUY rating on NHPC with a target price of Rs 120, offering a potential 20% return.
• Current Stock Performance: NHPC shares are trading around Rs 100, with a recent 52-week high of Rs 117.80.
• Strategic Expansion: NHPC has signed a 400 MW solar power purchase agreement with Jackson Green, enhancing its renewable energy portfolio.
• Financial Performance: NHPC stock has surged 50% in the last six months and delivered returns of 123% in one year, 228% in two years, and 285% in three years.
• Dividend History: Consistent dividend payments, with Rs 1.40 per share in February 2024 and multiple dividends in previous years.
• Market Capitalization: NHPC’s market cap stands at Rs 1.03 lakh crore as of July 3, 2024.

This comprehensive overview provides a strategic perspective on NHPC, making it a valuable resource for students preparing for competitive exams.