BUY NATIONAL HYDRO POWER CORPORATION (533098)

[smart profit]

CMP: 28
Target: 40 in 6 months

NHPC is a hydroelectric power generating company dedicated to the planning, development and implementation of an integrated and efficient network of hydroelectric projects in India. It is the largest hydroelectric power (HEP) generator in the country with 13 HEP with an installed capacity of 5.5GW. The company has a project pipeline, with 4.2GW of projects under construction and 11.2GW of projects under clearance and survey stage. The company has cash surplus of over Rs.4, 000 crore.

NHPC reports 47% rise in Q3 net profit at Rs 311.77 crore for the quarter as compared to Rs 212.18 crore for the same quarter in the previous year. Total income of the company has increased by 10.53% at Rs 1199.39 crore for quarter under review as compared to Rs 1085.13 crore for the quarter ended December 31, 2011.

 

Currently, it is engaged in the construction of 11 additional HEP totaling 4,622 MW and 8 of these projects totaling 1492 MW are scheduled for completion by the year 2013. The company also has seven HEP totaling 6,731 MW under various stages of clearances, and nine HEP totaling 7,255 MW, which are currently under Survey and Investigation. With 5,175 MW of capacity under operation, NHPC accounts for almost 14% of the 37,000 MW of hydel generating capacity in India..

 

It plans to increase the capacity to over 10,000 MW by end of 2020.

 

The coal price has raised, which will forced to increase in power price by 20%. This will further boost the profit margin of NHPC to a large extent.

 

Spanning on Government’s increasing emphasis on hydro power and NHPC’s strong hold in this segment. 

We recommend a strong BUY rating At the CMP of Rs 28 on the stock with a target price of Rs 40 and Rs 90 within 2 years.