NHPC Shares Gain 1.35% to Rs. 77.50 Despite Environment Ministry Blocking Subansiri Funding Plan

Overview:

• NHPC share price climbed 1.35% to Rs. 77.50 to see buyers remain active. Strong trading volumes and stable fundamental factors supported the upside move.

• The environment ministry had rejected NHPC's proposal to mortgage forest-land assets to raise loans, adding fresh delays to an already cost-overrun project.

• It has some analysts like the company's steady earnings and dividends, while some are concerned regarding project delays and rising costs; thus, the overall rating is mixed with "Hold".

NHPC share price jumped 1.35%, to 77.50, despite fresh fears over funding challenges and long delays marring its Subansiri Lower hydroelectric project. The stock opened at Rs. 76.47, which is its previous close. The counter witnessed a volume of over 83 lakh shares, which reached the previous day's high and low of Rs. 76.26-79.31 levels. The market witnessed turnover at Rs. 6,471.68 lakh. Here is an in-depth NHPC share price analysis based on Moneycontrol data.  

Current Performance

NHPC shares’ VWAP was Rs. 78.15, whereas market capitalization has reached Rs. 77,869 crore. NHPC remains a valuable stock in India's power sector. The shares have stable earnings, a healthy balance sheet, and an attractive dividend yield of 2.46%. Hence , attracting long-term investors to the stock.

NHPC share price chart on Moneycontrol shows gains of 1.29% at press time:

The TTM EPS of NHPC stock stands at Rs. 3.16 with a year-on-year growth of 6.58%. The company is trading at a TTM PE of 24.53, which is marginally below the industry average of 26.34, hence fairly valued. The price-to-book ratio stands at 1.97, which is within the industry average, and the stock is well above the 52-week low of Rs. 71, although still way below the 52-week high of Rs. 92.34.

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Analyst Sentiment: Mixed Views on Near-term Upside

With a total of seven analysts on Moneycontrol providing recommendations, NHPC presently has an overall ‘Hold’ rating. 43% recommend ‘Buying’, while 29% advise ‘Sell’, creating a pessimistic view. The steady performance and reliable cash flows justify the bullish outlook for the company, whereas apprehensions regarding project delays and cost escalation have balanced expectations.

Technical indicators reveal that NHPC is trading above its pivot of Rs. 76.05, with resistance levels at Rs. 77.05, Rs. 77.63, and Rs. 78.63. Supports are placed at Rs. 75.47, Rs. 74.47, and Rs. 73.89. It has a beta of 1.18, indicating moderate volatility.

Subansiri Lower Hydel Project Faces New Roadblock

Subansiri Lower Hydroelectric Project is a strategically important but heavily delayed project situated on the Arunachal Pradesh-Assam border. This project has been in the works for years and has now witnessed a cost escalation of over 300%, increasing financial pressure manifold.

To manage the cost of projects, NHPC had recently approached the Environment Ministry seeking permission for mortgaging certain assets located on forest land to raise funds. The Ministry has rejected the request, citing rules that bar the use of assets on forest land for raising finances.

Official records show that the company had sought an NOC to mortgage the assets for securing loans, and the Arunachal Pradesh government had sought clarity from the Centre on the issue. This rejection could further delay funding plans, and thereby also slow progress on a project already hit by ecological concerns, local protests, and repeated regulatory hurdles.

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Outlook

Despite the setback in funding for Subansiri, NHPC share price’s overall financial position remains intact on the back of regulated returns and predictable revenue from long-term power purchase agreements. Investors could continue to position the stock as a steady and stable dividend-paying option. However, future price movement will depend upon regulatory clarity and the progress the company is able to make on its key hydroelectric projects.

FAQs

1. Why did the NHPC share price rise today?

This was due to steady buying interest shown by investors, supported by strong trading volumes and stable financial performance, which positively contributed to the share price increase of NHPC. Although the company has project-related challenges, the stock gained on its reliable earnings and an attractive dividend yield.

2. What caused the most recent problem with the Subansiri project?

Then, the Subansiri Lower project hit a roadblock after the Environment Ministry refused to grant permission to NHPC for mortgaging assets on forest land for new loans, impacting funding plans and slowing progress on an already delayed and over-budget project.

3. Is NHPC still a safe stock to invest in?

Regulated tariffs, predictable cash flows, and strong long-term contracts make NHPC generally viewed as a stable and low-risk stock. Investors should balance safety with expectations, however, as ongoing project delays and cost increases may limit short-term upside.

4. What are analysts targeting for the NHPC share price currently?

Analysts currently have a mixed view about NHPC. A portion recommends buying on account of its performance consistency and dividends. Others advise caution due to challenges at the project level. Overall, it holds a “Hold” rating based on available data.

5. What can investors expect to see in the next few months?

Investors should monitor any updates regarding the Subansiri project, decisions on regulatory matters, and funding matters. These could impact the costs for NHPC, timelines, and earnings in the future. The market sentiment could also move based on the performance in other big hydropower projects.