Buy This Miniratna Penny Stock For Substantial Gains In 12-18 Months

NHPC, National Hydroelectric Power Corporation is a penny stock currently trading at a price of Rs. 33.85 per share. The company is a Miniratna entity and is the largest organisation for hydropower development in India.

About the company

The company being a hydropower major has all the capabilities to undertake all the activities from conceptualization to commissioning in relation to setting up of hydro projects. NHPC Limited has also diversified in the field of Solar & Wind power.

Financials

During the Year 2021-22, NHPC had a Income from sale of Power of Rs. 8181 Crore with a Net Profit of Rs. 3538 Crore. Total revenue at the concern has declined on a YoY basis, though net income has inched higher to Rs. 3523.57 crore. The company's FCF has been increasing and has been at Rs. 3090.84 crore in Fy21.

High on dividend yield

For the Fy 2022, the firm has declared Rs. 1.81 per share dividend which takes the dividend yield to 5.34% at the price mentioned earlier.

News regarding the scrip

As per the company's chairman and MD, the company is looking to securitise Rs. 2000 crore revenue in the current Fy23. In the previous year, the company was in receipt of Rs. 1000 crore via the asset backed securitisation of the Chamera 1 hydropower project (540 MW) and the same assumes significance as the power sector comprises 14% of the total assets on offer under NMP.

Why a 'Buy' on this Miniratna stock and expected target price?

The stock has been largely trading in a range and as the economy gears up and there is seen progress, in a general case these small cap stocks emerge as outperformers. So, with stable financials and sound fundamentals with attractive valuations, the stock is a buy. For the stock, analysts see a target price of Rs. 50 hitting in say 12-18 months. This is a significant upside of 48%

Disclaimer

The company is a Miniratna entity in the utility sector. Nevertheless the analysis and recommendation for a buy for the said target price should not be nudged as an investment advice into it.