Shares of Mini Ratna PSU and hydroelectric power generation company NHPC - part of CLSA's high conviction list - surged by 3.5 percent on June 23 after the brokerage said it expects the company to double its share price in the next few years, helped by fast-tracked power projects.
CLSA in a recent note, called the stock a 'decadal, double-digit EPS growth utility'.
Several large projects underway at NHPC are reaching completion stage, and CLSA said it sees the stock doubling in the next four years, helped by the Indus Water Treaty, which will result in a rising share of hydropower in India's electricity generation mix, thus providing a faster growth avenue for the company. CLSA currently has a price target of Rs 117 per share for NHPC.
The government's recent resolve to use more of the Indus river's water for India, along with faster project approvals in J&K, will likely lead to a higher viability gap funding, keeping the tariffs for its three new projects under Rs 5.5 kWh. Lower tariffs for hydro projects can make the electricity generated more competitive compared to other sources, likely increasing chances of adoption.
NHPC said all four units of the Parbati-II Hydro Electric Project in Himachal Pradesh have become commercially operational, with three units from April 1 and the fourth unit from April 16 onwards. The hydel project has added 800 MW to India's hydro capacity under the renewable portfolio.
"...full year generation and full year revenue will be there and we are in the process of filing tariff petition in the CERC. So, based on filing of tariff petition, we will recognize 90% of the revenue on provisional basis till the order comes from CERC," RP Goyal, Director (Finance) said about the Parbati-II project in May 2025.
NHPC also said there is a lot of emphasis on expediting projects, especially after the Indus Water Treaty was recently suspended, and the management said it is going to start the Uri-I Stage-II (240 MW) project, having already floated the tenders for civil works and other requirements.
"The Indus Water Treaty is not abolished. It is kept under suspension. So, in this scenario, yes, you are right that now there is a lot of emphasis and we are going to start the Uri-I Stage-II (240 MW) and we have already floated the tenders for civil works. For hydro mechanical works and for electromechanical works, we are going to float the tenders during this month only," NHPC's CMD RK Chaudhary had said in May.
The management confirmed that more projected are being explored on the Indus river in Leh, Ladakh region.
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