Shares of NHPC Ltd. surged 9% to hit a life-time high on Thursday after the key electricity regulatory body proposed to raise the return on equities for new storage-based hydro projects from April 1.
The Central Electricity Regulatory Commission, in its draft tariff norms for FY25–FY29, has raised the return on equity for new storage-based hydro projects—including pumped hydro—to 17% from 16.5%. It has kept the majority of norms for thermal and other power projects unchanged.
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Adding to this, the company also signed a pact with Gujarat Power Corp. to invest Rs 4,000 crore in the 750 MW Kuppa Pumped Hydro Storage Project at Chhota Udaipur in Gujarat.
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BofA has maintained an 'underperform' rating on NHPC with a target price 20% below the current market price at Rs 58.00 as the brokerage expects its medium-term growth to remain muted.
The brokerage expects it to sustain its current RoE of 15.5% on delayed project execution.
Shares of NHPC surged 9.05% to Rs 75.30 apiece, the highest level since listing on Sept. 1, 2009. It pared gains to trade 5.0% higher at Rs 72.50 apiece as of 09:52 a.m. This compares to a 0.33% advance in the NSE Nifty 50 Index.
In 12 months, NHPC Ltd has risen 84.95% Total traded volume so far in the day stood at 12 times its 30-day average. The relative strength index was at 75.88, which implied the stock is overbought.
Out of nine analysts tracking the company, eight maintain a 'buy' rating, and one suggests a 'sell', according to Bloomberg data. The average 12-month consensus price target implies an downside of 16.7%.
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