ICICI Securities upgraded NHPC as it sees limited downsides for the stock at its current price levels. 

What Happened: NHPC in its Q2 results reported a 41% year-on-year decline in net profit to ₹908.97 crore. The PSU company's revenue went up 4.1% to ₹3,051.93 crore crore.

The company in October reported a financial impact of around ₹327.67 crore from a landslide in Sikkim on its 510-megawatt Teesta-V Power Station. NHPC stated that the power station is currently non-operational and is undergoing restoration following the flash floods in October 2023.

NHPC's shares have fallen 13% in the last 6 months and over 1% on Monday after the market punished the stock for its poor Q2 results.

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Brokerage View: ICICI Securities upgraded the stock to "reduce" from "sell". The brokerage said the stock had corrected 30% in the last 3-4 months and estimate limited downside from the current levels. The analysts have a target price of ₹75 on the stock.

The brokerage is valuing the company at 15 times FY26 standalone EPS of ₹4.7 per share. The brokerage reasoned that NHPC has a 15% market share in domestically installed hydropower generation capacity. The company has taken various measures over the decade to improve its operating performance and plant availability factor (PAF) to 88.5% in FY23 from 77.8% in FY14, it added. 

However, the brokerage noted that in FY24, the PAF was at 77% due to lower water flow and damages due to flooding at certain projects.

Analysts at Kotak Securities and Antique Broking have also remained cautious on the stock after the Q2 print. Antique Broking's research team retained a "hold" rating on the stock with a target price of ₹92. Meanwhile, analysts at Kotak Securities maintained a "sell" rating, setting a target price of ₹70.

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