Reduce NHPC: target of Rs 72: ICICI Securities

ICICI Securities's research report on NHPC

NNHPC reported a steady Q2FY26, wherein subdued performance in standalone plants was offset by much better performance in subsidiaries. Its consolidated plant availability declined to 78.6% in Q2 (vs 88.9% YoY) impacted by lower availability in standalone plants, especially Parbati II and III. Generation improved YoY, partly due to commissioning of Parbati II and higher generation in subsidiaries; consol. generation grew 11% YoY while standalone generation was up 5% YoY. Its profit in Q2, at standalone/consolidated levels, grew 2%/15% YoY; limited profit growth YoY at the standalone level was partly due to lower than-expected availability in Parbati II and III power stations and a dip in other income. The Teesta-V power station, which was damaged due to flash floods in H1FY25, remains inoperative and NHPC expects it to resume operations in Q4FY26. Meanwhile, under-recovery thereon (estimated at INR 4–5bn annually) shall impact earnings. We upgrade to REDUCE.

Outlook

Given the decline in stock price over the last 3 months, we upgrade the stock to REDUCE, from Sell, with an unchanged TP of INR 72.