Investing in Renewable Energy Stocks in India: Why Should You Consider NHPC Ltd in 2024?

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Energy generation and distribution is one sector that has always held investors’ interest. In recent times, the renewable energy sector, in particular, is gaining traction as a popular investment segment in India and across the world. 

Let’s take a closer look at why renewable energy stocks are popular and why NHPC Limited — a leader in hydropower generation in India — may be an excellent choice to consider in 2024. 

The Rising Popularity of the Renewable Energy Sector in India

Traditionally, the energy sector has been dominated by companies generating power using coal and fossil fuel-based sources. However, in recent years, the global discourse on sustainability and ESG (environmental, social and governance) investing has been growing louder. With this shift, renewable energy stocks in India are finding favour with investors across the country. 

NHPC Limited: An Industry Leader in the Renewable Energy Sector

The National Hydroelectric Power Corporation (NHPC) Limited was established in 1975. Today, it is an Indian public sector undertaking that forms the backbone of India's hydroelectric power generation. As a leading organisation in the sector, NHPC Limited is tasked with the development and implementation of hydroelectric projects across India. 

Its portfolio also extends beyond hydro projects to include solar and wind energy sources. This reflects the company's commitment to diversifying into renewable energy. NHPC Limited also plays a pivotal role in India's energy security and contributes significantly to the national goal of sustainable development and reducing carbon footprint. 

With numerous projects across various stages of development, NHPC Limited is crucial in meeting the country's growing energy demands while promoting environmental conservation and community development. This is why it’s a renewable energy stock that has captured the interest of investors across India.

5+ Reasons to Consider NHPC Limited for Your Portfolio

You may be looking for ways to diversify your portfolio and include more sustainable investing strategies that can withstand long-term market movements. If that’s the case, renewable energy stocks like NHPC Limited may be worth considering. Here are over 5 reasons NHPC Limited is a stock to have on your watchlist in 2024.

  • Positive Business Outlook

NHPC Limited is a Miniratna company that has a fairly positive business outlook in 2024. It is currently the largest generator of hydroelectricity in the country, and accounts for 15% of India’s overall hydroelectric capacity. The company’s revenue sources are also stable because it generates income by selling power to northern and northeastern states via long-term power purchase agreements (PPAs) and contracts. This makes it a popular fixture on investors’ watchlists of renewable energy stocks in India.

  • Strong Financial Performance

NHPC Limited is also backed by strong financials. Recent data shows us that the company earned incentives of ₹398 crore in the first half of FY22 and ₹472 crore in the first half of FY23. Furthermore, its operational revenue grew by 15% year-on-year, and its EBITDA rose by 10% (to over ₹3,664 crore). These strong financial metrics, further cemented by healthy cash flows, make NHPC Limited one of the most sought-after renewable energy stocks in India in 2024. 

  • Potential for Expansion

Another reason to consider investing in renewable energy stocks like NHPC Limited is the company’s potential for expansion. While it is currently leading the hydropower race in the country, NHPC is also keen on expanding into solar power generation. The company recently entered into an agreement with the Green Energy Development Corporation of Odisha Limited (GEDCOL), to develop 500 megawatts of solar power in the state. What’s more, NHPC owns 74% of this venture. 

  • Good Debt Profile

Returning to the company’s financials, NHPC Limited also presents a good debt profile for investors looking to invest in renewable energy stocks in India in 2024. Its debt-to-equity ratio is in the range of 0.5 to 0.8, indicating a significantly low debt burden on the company’s balance sheet. Additionally, the company’s interest coverage ratio exceeds 10, indicating that it is sufficiently capable of covering its existing debts. These aspects make it a lucrative renewable energy stock in 2024. 

  • Favourable Dividend Yields

Investors also look into dividend yields before choosing renewable energy stocks for their portfolios. If you’re interested in earning some regular income from your investments, this aspect is crucial. In this regard, NHPC Limited does not disappoint because it has recorded stable dividend payouts ranging from 50% to 60%. The dividend yield comes in at around 4%, making it a fruitful investment option to consider in 2024 if you want the advantage of earning dividends and potential capital appreciation.

  • Post-Budget Bullish Outlook

The interim Budget 2024 increased the allocation to NHPC Limited from ₹9,006 crore last year to ₹11,761 crore. The renewable energy stock’s price reacted positively to this development and rallied to a record high, gaining more than 20% in just one week. Even beyond the short-term rally, the company has been bullish for a few years now, growing from ₹15 per share in 2020 to ₹115 in 2024 — indicating gains of over 665%. Near-term forecasts from experts suggest this trend may continue. 

  • Recent Outperformance

In addition to its bullish outlook, NHPC Limited has also outperformed benchmark indices like the Nifty 50 and the Sensex over the past 1 to 3 months. More specifically, NHPC’s 3-month returns are pegged at 104.20% — a massive record when compared with the Nifty’s 3-month returns of 13.0%. These figures make the renewable energy stock suitable not just for investors with a long-term outlook, but also for traders looking to capitalise on the stock’s momentum. 

The Bottom Line

If you have plans to diversify your portfolio to align with the rising interest in sustainable investment options, renewable energy stocks like NHPC Limited are ideal options to consider. Given the healthy financials of the company as well as its currently positive outlook overall, investing in NHPC can help you get a headstart and capitalise on the company’s possible potential for bullish performance in the future.

To invest in this renewable energy stock today, download the Samco trading app and tap into a world of benefits available exclusively to Samco’s community of online traders and investors. 

Frequently Asked Questions

  • Is NHPC a good pick for long-term investing?

Ans. Experts recommend that NHPC is currently among the top renewable energy stocks in India for long-term investing. This is because the company has recorded a 15% increase in revenue, a 10% rise in EBITDA and a strong debt profile.

  • What industry does NHPC belong to? 

Ans. NHPC Limited is engaged in the business of generating hydroelectric power in India. So, the company belongs to the energy sector. More specifically, it is one of the top renewable energy stocks in the country currently.

  • When was NHPC listed?

Ans. The IPO for NHPC Limited’s shares was open in 2009, from August 7 to August 12. The company was then listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on September 1, 2009. 

  • Is NHPC a profitable company? 

Ans. Yes, NHPC Limited is a profitable company, having reported a profit after tax of ₹1,053 crore for Q1 in the financial year 2023-34. 

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - Research Analysts -SEBI Reg.No.-INHO0O0005847

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