NHPC, a Mini Ratna category I public sector utility is the Indian government’s top hydroelectric power producer. They generate and sell bulk electricity to power companies. Additionally, they offer project management, construction, consulting, and power trading services. In an era where India is gradually becoming the renewable energy powerhouse, the National Hydroelectric Power Corporation is set to lead the industry in the hydropower sector. NHPC’s portfolio now extends beyond hydropower, encompassing solar and wind energy development as well. Moreover, the Government’s push and encouragement of renewable energy in all forms is yielding significant results. India already has a combined renewable energy capacity of 191.67 GW as of April 2024, including large hydropower.

Going forward, NHPC will seemingly perform well aided by a big list of industrial orders, financial push, cash inflows, green and renewable energy initiatives etc. The company boasts a 7,097 MW generation capacity, with hydropower accounting for the vast majority (6,971 MW) and renewable energy sources contributing 126 MW across 25 power stations in 13 states. NHPC is busy building 15 solar and hydropower projects with a combined capacity of 10,449 megawatts (MW). This includes projects undertaken by joint ventures and subsidiaries. As of December 2023, the company has an additional 4,112 MW of projects waiting for approval and 4,110 MW of projects under evaluation. NHPC is also expanding its presence in solar energy. On February 7th, 2024, they successfully launched a 380-megawatt (MW) solar power project in Neemba, Fatehgarh, Rajasthan. This brings their total commissioned solar capacity to 700 MW in the past year FY23, exceeding their initial target of 320 MW. They are on track to achieve their overall goal of 2,000 MW of solar power. Most importantly, NHPC plans to invest ₹10,857 Cr. in capital expenditure during FY24 on a consolidated basis. This investment will support the addition of 800 megawatts of capacity in FY25 and a further 2,000 MW in FY26. More recently in April 2024, NHPC collaborated with Ocean Sun to bring floating solar technology to India. The agreement uses Ocean Sun’s solar panels mounted on membranes. This furthers NHPC’s commitment to renewable energy. 

NHPC is currently trading with a P/E of 27.6 which is much lower than Industry P/E of 30.64. The margin is only a tad bit lower but the stock has huge potential to grow given the fact that overall circumstances in and around green energy are favorable. Moreover, the standalone net profit is on the rise (annually) since March 2021 and it has grown from ₹3245 Cr. to ₹3,834 Cr. in the year-ending March 2023. However, the company in FY ending March 2024 reported a fall in the net profit which stands at ₹3,744Cr. QoQ, the Net Profit stands at ₹698 Cr in comparison to ₹546 Cr. of the previous quarter ending December 2023. On a consolidated basis NHPC’s net profit for Q4FY24 dropped 18% YoY, landing at ₹610.93 crore compared to ₹745.27Cr. in the same period last year. This decline follows a slight decrease from Q3FY24, where net profit was  ₹628.44Cr. Although the result for the quarter is not exciting, the overall sentiment around the space is strong and fundamentally, the company is effectively backed by good financial strength, reasonable earning percentages, good ratios and most importantly an ever increasing order book.

Technically, the stock has been trading within a consistent zone of 90-98 for quite some months now since January 2024. It also made a high of 115 and a low of 74 in February and March respectively but quickly came back to its consolidation zone taking the support of SMA44. It reflects the stock’s urge to remain at the position and buildup for a breakout. The psychological 100 mark is very near and NHPC could soon touch the zone. However, the weaker set of numbers could delay the process and the stock may yet again resort to consolidation or ride higher with the sentiments of Indian elections in place and the green energy card could well do the trick faster than anticipated. On the RSI front, the stock is at a neutral zone. With a short term stop loss of 90 and long term of 74, the investors can choose to remain invested and accumulate on dips.