Shares of state-owned hydropower giant NHPC surged over 5% on Wednesday, reaching a high of Rs 76.07 apiece on the BSE. The rally came as the government's Offer for Sale (OFS) received a strong response from investors across both retail and non-retail categories.
Robust Demand Fuels NHPC Share Price Rise
The government is offering up to a 6% stake in NHPC, comprising a 3% base size and an option to sell an additional 3% if the issue is oversubscribed. Data indicated significant interest from non-retail investors on Tuesday, with bids totaling 94,21,29,951 shares against a base quota of 27,12,15,939 shares. This translated to an oversubscription of 347.37%, or 3.47 times, for the non-retail segment.
On Wednesday, the retail portion of the OFS also saw active participation, with bids for 60,33,569 shares, representing a 20.02% subscription of the 3,01,35,105 shares offered to retail investors. The indicative price for retail bids was Rs 71.50 per share.
OFS Floor Price and Analyst Outlook
The OFS was set at a floor price of Rs 71 per share, which represented a 7.85% discount compared to Monday's closing price of Rs 77.05. This attractive pricing contributed to the strong investor interest.
Brokerage firms have offered varying outlooks on NHPC. Kotak Institutional Equities, in a note dated June 1, maintained a 'Sell' rating with a target price of Rs 72. ICICI Securities, on May 19, also suggested a 'Reduce' rating with an unchanged target of Rs 72, though it anticipated NHPC's earnings to surge by 100% in FY27E, assuming full cost recovery from new power plants.
In contrast, JM Financial on May 19 reiterated an 'ADD' rating, raising its target price to Rs 86 from Rs 84. JM Financial highlighted the progressive commissioning of key projects like the 800MW Parbati-II and 2,000MW Subansiri, expecting regulated equity to grow significantly by FY28E.