How are energy investors positioned?
On Thursday, CLSA analysts maintained a positive outlook on NHPC Ltd (NSE:NHPC:IN), reiterating their High-Conviction Outperform rating and a price target of INR117.00. The firm’s analysis follows NHPC’s fourth-quarter financial year 2025 results, highlighting a significant year-over-year increase in profit after tax (PAT) by 52%. This improvement was attributed to the company’s ability to recover from lower power generation caused by water-related issues.
NHPC’s consolidated recovered Earnings Before Interest, Taxes, Depreciation, and Amortization (Ebitda) also saw a 23% rise year-over-year as the impact of El Niño lessened. The company launched one of its top three projects on April 16, 2025, which is expected to contribute 25% to NHPC’s revenue earning equity (REE) growth from FY25 to FY27CL. This project commencement is seen as a significant step in NHPC’s development trajectory.
The company has also been actively investing in its infrastructure, with 91% of its capital expenditure directed towards the second-largest hydroelectric project currently under construction. CLSA views this investment as a critical catalyst for the stock. Looking ahead, the firm forecasts an impressive 114% growth in REE (excluding minority interests) from FY24 to FY28CL, contrasting sharply with the 2% growth observed over the past five years.
According to CLSA’s projections, the anticipated expansion in REE is set to drive a 69% increase in earnings per share (EPS) and a 419 basis points rise in return on equity (ROE) by FY27. Based on these expectations, CLSA reaffirms its High-Conviction Outperform recommendation for NHPC, signaling confidence in the company’s potential for substantial growth and profitability in the coming years.
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