Maintain 'HOLD' on NHPC - Geojit BNP Paribas

- NHPC's Q3FY13 numbers came in below estimates. Sales declined 7.10% to Rs.1700 crores from Rs.1830 crores, a year ago while Net Profit declined 18.94%, YoY, to Rs.784 crores.

- The decline in sales numbers was despite power generation growth of 7.7%, YoY. Even after adding back under-recoveries in the two projects, pending regulatory approval of final tariffs, and slightly lower YoY income from incentives, secondary energy charges and unscheduled Interchange, sales would still have come in flat on a YoY basis.

- We maintain HOLD (Current Price: Rs.22) on NHPC because no meaningful upside potential exists as completion of new projects is offset by significant execution delays and cost overruns on large hydro power plant while an attractive dividend yield provides downside protection.

- We advise a switch from NHPC to our top pick in the sector, Power Grid, which has growth driven by solid execution.

Source : Equity Bulls

Keywords