NHPC shares surge 5% on strong OFS response; retail subscription at 20%

Shares of NHPC climbed 5 per cent in Wednesday's , as offer for sale (OFS) by the government received a solid response from non-retail investors, with the issue receiving 347.37 per cent or 3.47 times bids, exchange data showed. The PSU stock rose 5.24 per cent to hit a high of Rs 76.07 apiece on BSE, with data suggesting retail portion getting bids for 60,33,569 shares or 20.02 per cent of the offer size of 3,01,35,105 at an indicative price of Rs 71.50 apiece. 

Earlier on Tuesday, the NHPC's offer received 94,21,29,951 bids from non-retail investors against the base quota of 27,12,15,939 shares. This was 347.37 per cent or 3.47 times the offer size, data available with BSE suggested. 

Employees and non-retail investors who placed their bids on Tuesday and have chosen to carry forward their unallotted bids to Wednesday, for allocation to them in case of unsubscribed portion of Retail category, are allowed to revise their bids today as per the SEBI OFS circular.

Such bids at 28,06,498 shares on Wednesday accounted for 9.31 per cent of the retail offer size.

The government is looking to sell up to 6 per cent stake. In its base size, it intends to sell 3 per cent stake, keeping an option to sell a further 3 per cent in case the issued is oversubscribed. The strong investor response on Day 1 of the two-day issue was seen as the OFS was set at a floor price of Rs 71 apiece, which was at a 7.85 per cent discount to Monday's closing price of Rs 77.05 per share.

The offer is underway during trading hours on a separate window of the stock exchanges commencing at 9:15 am Indian Standard Time (IST) and will close at 3:30 pm.  

Kotak Institutional Equities in a note on June 1 suggested 'Sell' on NHPC with a target price of Rs 72, just above the OFS price. ICICI Securities had on May 19 said that earnings from new power plants could remain subdued till the final tariff order is issued, and there is no significant difference between approved capital cost and actual capital cost. 

It anticipated NHPC's earnings to surge 100 per cent in FY27E, assuming full cost recovery. For now, the broking firm maintained its 'reduce' on the stock with an unchanged target of Rs 72.

"After a seven-year gap since the 330MW Kishanganga project in 2018, the company has seen progressive commissioning of 800MW Parbati-II and 2,000MW of Subansiri. We expect regulated equity to rise to Rs 32,100 crore by FY28E from Rs 18,300 crore currently. We maintain ADD on the sole large utility that boasts a 100% green energy portfolio, with a TP of INR 86 (earlier INR 84) based on 1.8x P/B FY28E," JM Financial aid on May 19.