NHPC Ltd - Triggers for stock price lined up; Buy - Emkay

Reco: BUY
CMP: Rs 18
Target Price: Rs 26

- 1Q13 APAT at Rs6.5bn (up 9% yoy) was above est. due to (i) other income at Rs2.7bn vs. Rs2.1bn est. and (ii) incentives of ~Rs1.1bn vs. Rs0.7bn est. (1Q13 PAF 93.8% vs. 90.8% yoy).

- Based on CEA update/ update from mgmt, we have factored FY13E - 471MW (231MW Chamera III already commissioned and Uri II - 240MW) and FY14 - 511MW (Nimoo Bazgo, Chutak, TLDP III/IV and Parbati III one unit).

- Given no significant upsides in PGCIL/NTPC, foresee some buying in the stock (small weight shifts), despite being in hydro power business (relatively tougher one) and not having generated any returns for investors in the past.

- 4 reasons (1) only other large cap regulated utility, (2) against no comm. in 2yrs, commissioned 231MW Chamera III recently & every 3-6mths comm. lined up, (3) probability of CERC allowing 1% higher ROE & (3) stock at 45% disc to NPV.

Source : Equity Bulls

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