NHPC | A value buy at present price for investment

Discussion in 'Investment and Finance' started by itsmemad, Dec 10, 2010.

  1. itsmemad

    itsmemad Alligator

    Fundamental Analysis of NHPC:

    1. Current Market Price (CMP) is Rs. 26.80
    2. Face Value of NHPC is Rs. 10.
    3. Present Book Value of NHPC is Rs. 18.92. At the CMP, NHPC looks very attractive to buy.
    4. Promoter holding is 86.36 percent, FII holding is 1.60%, General Public holding is 6.75%. High promoter holding is a good sign. It's always good to have formidable cushion of promoters for the general public.
    5. NHPC is a value buy below Rs. 20-21 level. However, considering the book value of the stock which is on constant rise, I wouldn't mind accumulating it at present price levels.
    6. It will be good to bring the average cost below Rs. 25 for long term investment.
    7. NHPC also pays dividend. Last time it paid Rs. 0.55 dividend per share in March 2010.
    Conclusion: Good stock for long term investment. My strategy would be to buy the first lot below Rs. 28. Buy another lot below Rs. 25. If the price goes below Rs. 21, buy the final lot.

    Objective: Refer point # 6. However, I wouldn't want to keep all my eggs in one basket. Won't spend more than 10% of my total capital on NHPC.

    INVEST AT YOUR OWN RISK

    P.S.: Looks like further decline in the NHPC stock price can't be ruled out for intermediate period. NHPC will miss its capacity addition target for five years ending in March 2012 by 3,000 megawatts (MW) from the targeted 5,322 MW, its Chairman S.K. Garg said on Thursday. Reuters
    Last edited: Dec 10, 2010
  2. Admin

    Admin Administrator Staff Member

    I believe with gas and coal prices going up in future and leadng to higher electricity costs the profit margins for NHPC will go up and margins for the likes of NTPC would come down in the long run.

    I dont see NHPC coming down to the 25 mark ever unless a dam is blasted off by some terrorists or something happens to Arunachal pradesh. FII's do not like this stock too much because of NHPC's project in Arunachal Pradesh and they are all used to seeing the Chinese version of the maps where they show Arunachal Pradesh as part of China! So they will not invest into this stock for now untill they see some clarity on this matter.

    NHPC is a long term cash cow and those who buy at the current 28 something level will not regret it. I would suggest buying this stock on regular basis for the next 3-4 years and then just keep it for ever as this company will be one of the highest dividend paying companies in 6-7 years time and the stock price by then will be in excess of Rs250-300 in my opinion and brokerages will be recomending buy for long term at that price and you would be laughing watching tv sitting on a huge amount of NHPC with an average price less then Rs40-50 and would have recovered most of your cost in dividend payouts by then and getting atleast a 4.5-5.5% dividend returns every year... what else would you ask from Kuber?

    Disclaimer: I have NHPC in my core portfolio.
  3. ahmed7553

    ahmed7553 New Member

    i think nhpc suffers from perception that people have psu..it produces electricity from water that means negligible raw material cost,with prices of crude above 100$ a barrel...people will switchover to this stock...see prices touching 100 when perception clears
  4. itsmemad

    itsmemad Alligator

    Well, it touched its yearly low of 22.25 in the month of March. Still trading below Rs. 25 mark. CMP: Rs. 24.50. Good time for long term investors to start accumulating it.

    Disclaimer: I don't have NHPC in my portfolio.
  5. Admin

    Admin Administrator Staff Member

    This is a good time to buy into this stock if you don't already have it. I have been adding regularly and will keep adding till it looks reasonable. Where else can you make a tax free 6-7% (dividend) a year and also have decent growth over time besides the regular income.

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