Stock of this state-run power producer can double in 4 years, says CLSA 2025 best

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CLSA, a prominent Hong Kong-based brokerage, has recently upgraded NHPC Limited, India’s leading state-run hydropower company, to a ‘high conviction outperform’ rating from its previous ‘outperform’ stance. The firm has set a target price of ₹117 per share, slightly adjusted from the earlier ₹120, indicating a potential upside of approximately 57% from the current trading price of ₹77.64. citeturn0search0

Key Factors Influencing CLSA’s Upgrade:

1. Attractive Valuation Post Correction: Over the past six months, NHPC’s stock has experienced a 25% decline, presenting an attractive entry point for investors. CLSA views this correction as an opportunity to invest in a company with strong growth prospects. citeturn0search0
2. Improved Return on Equity (RoE): CLSA anticipates an enhancement in NHPC’s RoE, driven by the commencement of new projects and the efficient operation of existing assets. This improvement is expected to bolster the company’s financial performance and shareholder value. citeturn0search0
3. Expansion into Pumped Storage Projects: NHPC plans to invest approximately ₹84,000 crore to develop 22 gigawatts (GW) of pumped storage capacity. This strategic move aims to diversify its energy portfolio and tap into the growing demand for flexible and reliable power sources. citeturn0search0
4. Significant Share in Under-Construction Projects: NHPC holds a 67% share in India’s under-construction hydroelectric projects, positioning it as a key player in the nation’s hydropower sector. This substantial involvement is expected to drive future revenue streams and enhance market share. citeturn0search0
5. Upcoming Listing of Renewable Energy Subsidiary: The company plans to list its renewable energy subsidiary, NHPC Renewable Energy, within the next two years. This move is anticipated to unlock additional value and attract a broader investor base. citeturn0search0

Implications for Investors:

CLSA’s upgrade reflects a positive outlook on NHPC’s strategic initiatives and financial health. The anticipated doubling of the stock price over the next four years underscores the brokerage’s confidence in the company’s growth trajectory. Investors should consider these developments when evaluating NHPC’s potential as a long-term investment opportunity.

For a visual overview of CLSA’s analysis on NHPC, you may find the following video informative:

videoCLSA Upgrades NHPC To High Conviction Outperformturn0search1