CLSA maintains 'high-conviction outperform' on NHPC shares, sees 44% upside

NHPC shares have tanked around nine percent on the bourses over the past 12 months.

Hong Kong-based brokerage maintained its 'high conviction outperform' rating on state-run renewable power player NHPC,  bullish on the firm likely commissioning the Parbati-II HE (hydroelectric) project in Himachal Pradesh in early April.

Currently, 50 percent of the project's capacity has been achieved at 110 percent load for 12 hours, with the remaining capacity expected to be ready by the end of March. The project, which was initially planned for completion in seven years, has taken 25 years due to its complexity.

Once operational, Parbati-II will increase NHPC's capacity by 11.5 percent and boost regulated equity by FY26, said CLSA.

The brokerage maintained its target price of Rs 117 per share, which indicates a 44 percent upside from current levels.

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CLSA had hiked its rating on NHPC to 'high-conviction outperform' rating from 'outperform' in February 2025, amid cheap valuations.

The 25 percent correction in NHPC shares over the past six months gives investors an inexpensive opportunity to accumulate. According to the Hong Kong-based brokerage, NHPC's stock price could double in the next four years.

Further, the levels of growth can come from the start of the Parbati 2 hydro project, boosting regulated equity 27 percent in Q1FY25 along with the firm's entry into shorter-duration regulated pump storage.

NHPC will commission hydro projects with a total capacity of 2,170 megawatt (MW) by the end of FY26, the public sector undertaking’s (PSU) chairman and managing director Raj Kumar Chaudhary had told Moneycontrol in an exclusive interview.

Besides, the much delayed 2,000 MW Subansiri hydropower project in Arunachal Pradesh will also be commissioned in FY26, he said.

NHPC currently has a total operational capacity of 7,233 MW, of which 6,571 MW is hydropower and the remaining 662 MW is renewable energy. Another 9,314 MW of hydro projects are under construction. At least, 4,000 MW of hydropower projects are at various stages of clearance, and about 5,500 MW at the survey stage. Besides, new initiatives comprise as much as 14,700 MW.

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