NHPC Share price: Steady earnings buoyed by surcharge income-- Check what ICICI securities says

NHPC Share price is trading at Rs 27, flat in today’s session. NHPC market cap is Rs over 27000 crore. The 52 week low on NHPC is Rs 19.4 and the 52 week high is Rs 27.6. It is expected to move up, highlights ICICI Securities.

ICICI Securities says that NHPC has reported good earnings in Q4FY21. Standalone reported PAT was up 5.6% at Rs 4bn, mainly due to higher surcharge income. However, adjusted PAT was up 21.2% YoY at Rs 4.6bn (one-time provision of Rs 0.6bn). Standalone reported revenue/EBITDA was Rs13.4bn / Rs 4.3bn, down 30% / 22.5% YoY respectively. The quarter’s performance takes the company’s FY21 adjusted EPS to Rs 3.2 (up 7.5% YoY) which, considering the company had provided Rs1.9bn rebate on fixed costs in Q1FY21, is a significant achievement. NHPC has also declared a final dividend of Rs 0.35/sh, taking the total dividend to Rs 1.6/sh (implying 6% yield at CMP). ICICI Securities maintains BUY on the stock, but slightly increases target price to Rs 35 (earlier Rs 34).

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NHPC’s standalone hydro generation declined 25% YoY at 2,946MUs for Q4FY21 due to low water flow at most of its plants. However, higher late payment surcharge (at Rs 3.3bn) helped increase ‘other income’ by 13% YoY. On a standalone basis, reported PAT came in at Rs4bn, up 5.6% YoY. However, adjusted PAT was up 21.2% YoY at Rs4.6bn. NHPC made a provision of R s0.6bn (post-tax) for Parbati-III and Tawang-II projects during the quarter. Standalone revenue/EBITDA for the quarter declined 30%/ 22.5% at Rs 13.4bn/Rs4.3bn respectively, due to lower generation. Consolidated reported PAT (attributable to the company) for Q4FY21 was up 171% at Rs4.3bn

NHPC has declared a final dividend of Rs 0.35/sh taking the total FY21 dividend to Rs1.6/sh, implying 6% yield at CMP. NHPC follows the GoI-mandated dividend policy (higher of 5% of net worth or 30% of PAT), which will continue to be >Rs1.5/sh p.a. going forward

On account of receipt through the PFC / REC Aatmanirbhar scheme as well as pending payments from states, NHPC’s receivables reduced to Rs 32bn at FY21-end, which is 36% lower from the Q2FY21- end level of Rs 50bn and 16% lower than FY20-end level

NHPC is the only ‘completely green’ PSU generating company as well as the largest in the country. The stock is trading at 7.6x P/E and 0.8x P/B on FY23E basis. Its dividend yield is >6%. ICICI Securities maintain BUY rating, but slightly increases target price to Rs 35 (earlier Rs 34), incorporating higher ‘other income.