NHPC Shares Surge by 8.5% to Hit 52-Week High on CERC’s Tariff Regulations Draft Announcement

NHPC Shares Surge by 8.5% to Hit 52-Week High on CERC's Tariff Regulations Draft Announcement

VoM News Desk | January 5, 2024 | 11:58 AM IST | Breaking News | Follow on Google News

NHPC Shares Surge by 8.5% to Hit 52-Week High on CERC’s Tariff Regulations Draft Announcement/Pixabay

NHPC Shares Surge by 8.5% to Hit 52-Week High on CERC’s Tariff Regulations Draft Announcement

The NHPC share price experienced an upward spike of 8.5% during Friday’s trading session, reaching a 52-week high following the release of the Central Electricity Regulatory Commission’s (CERC) Draft Tariff Regulations for 2024–2029. These regulations raised the Return on Equity (ROE) for pumped hydro storage and run-on rivers with pondage from 16.5% to 17%, as reported by ICICI Direct Research.

Starting the day at an initial low of ₹70.10 per share, NHPC’s stock soared to an intraday high of ₹75 apiece on the BSE. ICICI Direct Research suggested that these regulations bode well for hydro generating companies like NHPC, particularly due to investments in pumped hydro projects and capacities based on pondage.

NHPC recently disclosed signing a Memorandum of Understanding (MoU) with Gujarat Power Corporation Limited (GPCL) at the Vibrant Gujarat Global Summit, 2024, for a proposed investment of Rs. 4,000 crore in the Kuppa Pumped Storage Project (750 MW) in Chhota Udaipur, Gujarat, slated to commence in 2024–25.

Marking the second consecutive session of NHPC’s stock surge, it has seen an approximate 6.5% increase over these two sessions. Over the past year, NHPC’s stock surged by 81.76%, outperforming its sector by 22.05%, as per trendlyne.

According to Ruchit Jain, Lead Research Analyst at 5paisa, the broader trend for NHPC’s stock remains positive, supported by substantial volumes, potentially signaling a sustained upswing. Investors holding long positions are advised to capitalize on this trend, with the stock’s 20 Days Exponential Moving Average (DEMA) support positioned around ₹65.

The CERC draft paper also underscored specific ROE figures, notably maintaining 15.5% for thermal plants and run-on-river hydro plants. However, it reduced to 15% for transmission assets, and SBI’s MCLR + 350 bps (with a ceiling of 14%) is designated as the regulated ROE for capital expenditures on emission control equipment. Additionally, thermal plants must maintain a normative Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 85% each to qualify for incentives.

In financials, NHPC reported a net consolidated profit of ₹1,693 crore in the September quarter of FY 23-24, compared to ₹1,685.81 crore in the corresponding period last year. Total income dipped to ₹3,113.82 crore from ₹3,477.93 crore recorded a year ago.

VoM News Desk

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