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NHPC Limited, previously called the National Hydroelectric Power Corporation, is one of the largest companies engaged in hydroelectric power generation in India. NHPC was established in 1975 with a clear objective to strive in planning, promoting and implementing development of efficient hydroelectric power throughout the country.
Gradually, NHPC diversified its scope to include other non-conventional energy sources such as geothermal, tidal, and wind energy. NHPC began its journey with the investment of Baira Suil Power Station project which is located in Salooni Tehsil in Chamba district and is the first operational project of NHPC.
On October 31, 2024, NHPC Limited (NHPC.NS) shares traded at 82.44 INR. Prices reflected a decrease of 0.19% of value on that specific trading day. The company has strong fundamentals as evidenced by the current market capitalization of INR 828.11 billion and its five-year monthly beta amounting to 0.24, which means the company is not highly volatile compared to the general market average. The stock’s price-to-earnings (P/E) ratio is 26.09 whereas its earnings per share (EPS) is 3.16.
Their next earnings report will be published on November 7th 2024. The Company also gets a forward dividend of INR 1.90 with a yield of 2.30%. The last ex-dividend date was on August 12, 2024. For investors, the share price estimate for NHPC is INR 96.29, which represents a potential increase in value.
As per the latest reports for the end of 31 October 2024, it has been noted that NHPC enterprise value of the company works out to 1.14 trillion thrice which places it strongly in the market. The company’s trailing P/E ratio is found to be 26.16 which shows how the investors value the shares of NHPC with respect to the company’s earnings. With its price-to-sales (P/S) ratio being 9.03 and price-to-book (P/B) ratio being 2.14, NHPC is selling at considerably inflated values compared to sales and book value indicating its premium.
The enterprise value/revenue ratio is calculated as 12.41 , while the value upside and enterprise value/EBITDA ratio is 13.75 suggesting relevant metrics for NHPC as its operating assets before interest and taxes, amortization and depreciation.
NHPC demonstrates strong profitability with a profit margin of 37.79%, translating its revenue into substantial net income. The company's total revenue over the trailing twelve months (ttm) is INR 95.69 billion, with a net income attributable to common shareholders of INR 36.16 billion.
This results in a diluted earnings per share (EPS) of 3.16,which shows satisfactory earnings. Total cash in hand & Reserve (as of the company’s last quarter) stood at 33.98 billion Indian rupee, whereas the company had debt to equity of 78.78 % which reflects a relatively cautious stance towards debt without the strain of current liquidity.
NHP Return: +30.24%
S&P BSE SENSEX Return: +9.90%
Analysis: In the period of YTD, NHPC has been able to outperform the SENSEX to a considerable extent and currently the company shows promising growth opportunities in the year.
NHPC Return: +64.97%
S&P BSE SENSEX Return: +23.83%
Analysis: In comparison with last year NHPC overed the returns at more than the SENSEX suggesting that there’s strong interest amongst investors given that the business is fundamentally strong as well.
NHPC Return: +203.71%
S&P BSE SENSEX Return: +33.86%
Analysis: Over the period of three years, NHPC grew well with over six times the earnings of SENSEX , which speaks of its long term potential.
NHPC.NS 5-Year Return: +345.80%
S&P BSE SENSEX 5-Year Return: +98.22%
Analysis: In the long term, NHPC’s return is more than three times that of the benchmark, indicating substantial value appreciation for investors with a five-year horizon.
Growth Differential: In each time frame (YTD, 1-Year, 3-Year, 5-Year), NHPC.NS has outperformed the SENSEX by a large margin.
Implication: NHPC’s performance suggests resilience and potential as a high-growth investment, especially appealing to those looking for alternatives to index-based investing.
Overall EPS Performance
Actual EPS: +1.54
Estimated EPS: +1.50
Quarterly EPS Beat Overview
Q3 2022 EPS: Beat by +$0.23
Q2 2023 EPS: Beat by +$0.13
Q3 2023 EPS: Beat by +$0.04
Each quarter listed shows NHPC’s consistent ability to exceed EPS estimates, though the magnitude of the beat has declined from Q3 2022 to Q3 2023. This could indicate moderated growth or increasing alignment with analyst projections.
Scheduled Date: November 7
Outlook: Investors may look forward to Q4 2023 earnings to determine if NHPC can continue its trend of exceeding EPS expectations.
Consistency in Beating Estimates: NHPC has consistently outperformed EPS estimates over several quarters, which might reflect robust financial management and strong operational efficiency.
Trend of Reduced EPS Surplus: While NHPC has beaten estimates each quarter, the difference between actual EPS and estimates has decreased, indicating more cautious optimism or potential challenges that may be affecting growth.
Investor Implications: This consistent performance above expectations may appeal to investors focused on stable growth and earnings reliability, but the decreasing EPS surplus could suggest a slower growth phase.
The 77 level has emerged as a critical support zone for NHPC, with recent price action affirming its strength. This level has acted as a floor for the stock multiple times, with the first rejection occurring in February.
Last week, NHPC found support at 77 again and has since shown strong bullish momentum, with four consecutive bullish daily closes. This indicates that buyers are stepping in at this level, reinforcing it as a solid support area.
If the bullish momentum continues from the current support, NHPC's next target is the 116 resistance level. This level serves as a potential profit-taking area for short-term traders or a breakout level for those looking at longer-term gains.
Breaking above 116 could pave the way for further gains, while failure to hold the 77 support could indicate a trend reversal or consolidation phase.
Bullish Momentum: The recent bullish closes suggest that upward momentum is gaining strength, possibly signaling a trend continuation if NHPC remains above 77.
Traders may consider entering near the 77 support level with a stop-loss just below it, targeting the 116 resistance for potential gains.
Support: 77 (proven strong with multiple rejections)
Resistance: 116 (next target if bullish momentum continues)
Strategy: Enter near support, target resistance, monitor for trend continuation or reversal
NHPC Limited, a prominent player in India’s hydroelectric power generation sector, has shown significant growth and stability over the years. With strong fundamentals, NHPC has consistently outperformed the S&P BSE SENSEX benchmark, delivering robust returns for investors across various time frames. Supported by favorable technical indicators, NHPC’s stock has shown resilience, especially around the critical support level of 77, with potential upside targets nearing 116. The company’s diversification into other renewable energy sources and stable financial performance highlight its growth potential for the long term.
With upcoming earnings on November 7, 2024, and a projected share price target of INR 96.29, NHPC appears well-positioned for further appreciation. For investors, NHPC represents a balance of stability and growth in the renewable energy sector, making it an attractive option for both short-term gains and long-term portfolio growth. However, the slight decrease in the EPS surplus trend and premium valuation metrics suggest a cautious approach. Overall, NHPC remains a compelling choice for investors seeking resilient, high-growth alternatives to index-based investing.
