NHPC’s stock price dropped over 10% before the Q3 results on Monday.
NHPC Limited, the Indian public sector hydropower company, has delivered substantial returns to investors, nearly tripling in value over the past year before today’s decline. Just recently, NHPC shares reached a 52-week high of ₹115.85, but on Monday, they were trading around ₹85.
NHPC’s impressive returns were fueled by a robust increase in power demand across the country, which has persisted after the easing of COVID-related restrictions and their impact.
The country’s power demand surged in FY24 and is expected to continue rising in FY25. November witnessed robust peak demand, driven by the festival season.
In Q3FY24, electricity generation increased by 13% YoY to 416 Billion Units, despite a high base from the previous fiscal (up 10% in FY23). October witnessed a significant 25% YoY rise in generation to 150BUs, attributed to high humidity. November saw an 11% YoY increase to 130BUs,” noted analysts at Elara Securities India Pvt Ltd.
Analysts also highlight that, in addition to the surge in power demand, companies are heavily investing in renewable capacities, driving capital expenditure.
Rupesh Sankhye, a research analyst at Elara Securities India Pvt Ltd, highlighted that the recent corrections in the stock price are due to its high valuations. The market cap of NHPC has exceeded ₹80,000 crore, far surpassing its regulated equity of ₹14,000-15,000 crore.
Peers like SJVN Ltd have also posted disappointing results, affecting investor confidence. While company fundamentals and outlook have improved, analysts note that high valuations are dampening stock prices.
Additionally, the offer for sale of NHPC Limited shares by the President of India at ₹71 per share to eligible employees and subsidiaries is influencing market sentiment.
The OFS at ₹71.00 per equity share is set to open from February 13, 2024.
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