Visit http://indiaer.blogspot.com/ for complete details NHPC: (NHPC.BO; Neutral; 12-month TP: Rs31, potential downside 3%)
We upgrade NHPC to Neutral from Sell purely on valuation (see Exhibits 20, 21&
24). The stock has underperformed the index over last 6 months and we believe
the NHPC share price already reflects the underlying execution risks.
We believe commissioning of the new capacities is the key driver of the stock price.
We rolled over to FY12E and raise our 12-month DCF based target price to Rs31
(from Rs27) implying potential downside of about 3%. We revise our
FY11E/12E/13E EPS by 4%/3%/1% to reflect 1QFY11 results.
Since we added NHPC to the Sell list on April 20, 2010, the stock has increased by
4.1% (vs. BSE Sensex up 15.5%). Over the last 12 months, the stock has decreased
2.7% (vs. BSE Sensex up 20.1%) (see Exhibit 102).
Key risks include faster/slower than expected commissioning of capacity.
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