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| Name of Company | NHPC Ltd |
| BSE Code | 533098 |
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| ICICI Code | |
| Established | |
| My Take | Like |
| Headquarters | Faridabad |
| Promoters | Govt of India |
| Story | 35K Cr market cap company even at all time low of Rs. 28. About 86% promoter stake held by government. Listed in Sep 2009. Really good company with good projects coming up. |
| Sector | Energy |
| Sub-sector | Hydro-power |
| Website | |
| Positives | EPS is at 1.76 for FY10 which makes the P/E 16.47. For a annual earnings of 4300 Cr in FY10, the market cap is slightly high. With commissioning of the new power plants, the earnings and profit growth is on track. Hydro-electric power requires less maintainance and no fuel costs. |
| Negatives | Government policy and slow processing may hurt commissioning new projects. Hydro-electricity requires heavy capital, long commission periods. Profitability depends on vagaries of nature (rain and earthquakes) |
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May 29, 2010
NHPC Ltd - 533098
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This company is still at the same level where this was blogged (@Rs.28). I find too much value in this clean energy company. Hydro-power does not require any fuel costs and not too much maintainance cost as well. Only problem is initial investment in high. With 11K reserves and 14K debt - this is how projects are funded. Mostly 30% from internal money and 70% debt. ROCE is just 6-7% - But as the company has huge margins at 50% or more, the interest burden can be adjusted - the NPMs would come down until the high interest debt is cleared.
ReplyDelete2014 targets should double the revenues, but the profits might not double. Though they dont achieve it in 2014, with the government's emphasis on energy - we will have it soon - say in 2016. Debt is even more worrying because of the company's 2014 targets. They need to borrow more to achieve targets and with interest rate being higher, again another bad thing for the company.
Overall super like for long term.
The stock is now at 18, market cap of 22K Cr - A huge loss to those who bought it at IPO, or the price I bought (28). Yeah, I still like the company(from Super like). P/E is 8.24, Half of what it was when I first blogged this. I still hold on to this stock. I am now going to add double what I had earlier.
ReplyDeleteAbout growth, I first thought targets would not be achieved but NHPC would be close by. I was wrong. Following this closely, I understand this company does not live up to its targets. See expert from RBS report:
Capacity addition delays will continue to haunt NHPC
In the best case scenario, NHPC is likely to add 1.7GW of generation capacity in the XIth Plan, or 31% of the original target. We expect the remaining 3.7GW from the XIth Plan to be commissioned between FY13-16 and for it to be back-ended, with FY15-16 likely to see a 2GW addition; further delays cannot be ruled out. We believe that delays will continue to be a
recurring feature for hydro projects, led by geological surprises, natural calamities and local protests. As per our estimates, without any delays our core book would have been higher by Rs5/share and target price by Rs10/share.