Shares of NHPC Ltd are likely to remain in focus on Thursday after brokerage CLSA assigned a high-conviction 'Outperform' rating on the stock with a target price of Rs 117. Analysts cited a sharp improvement in the company's long-term earnings outlook driven by an expanding regulated asset base and a strong hydroelectric project pipeline.

NHPC shares ended Wednesday's session 2.39 percent lower at Rs 79.39. The stock has declined 6.3 percent over the past year, compared with a 5.7 percent fall in the Nifty 50. The company has a market capitalisation of about Rs 79,900 crore. CLSA’s target price implies an upside of over 47 percent.

CLSA said FY26 marked the start of two of NHPC's largest projects, resulting in a 25 percent year-on-year increase in regulated equity. However, reported profit after tax was held back by delays in tariff approval for the Parbati-II project and the restoration of the Teesta project. The brokerage also described the company's accounting policy as ‘conservative’.

  • Share Markets Live Updates | Sensex, Nifty, GIFT Nifty Today

Following discussions with the management, CLSA said the company had addressed investors' key concerns around profit growth. NHPC also clarified that its accounting approach had depressed FY26 earnings, masking the underlying improvement in the business.

The brokerage expects NHPC to emerge as the biggest beneficiary of the suspension of the Indus Waters Treaty, adding that two of the four planned hydroelectric projects have already been awarded and are expected to be completed in less than four years.

CLSA forecasts recurring earnings excluding minority interest to grow 90 percent between FY26 and FY30, compared with 31 percent growth over the previous five years. It expects earnings per share to double over the period, supported by a step-change in recurring earnings. The return on equity is projected to expand by 750 basis points between FY26 and FY28.

For the quarter ended March 2026, NHPC reported a 68.5 percent year-on-year rise in consolidated net profit to Rs 1,549 crore, while revenue from operations increased 20 percent to Rs 2,816 crore. EBITDA was broadly flat at Rs 1,196 crore, with margin narrowing to 42.5 percent from 51.3 percent a year earlier. The company's board also recommended a final dividend of Rs 0.21 per equity share for FY26, in addition to the interim dividend of Rs 1.40 per share paid in February.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.