NHPC and KEC International: Weekly Recommendations

The two stocks recommended by SMC Global Securities’ Research Team this week are NHPC and KEC International. These two stocks have shown great potential with positive financial estimates for the next two financial years. So, let’s go through the details of the two stock recommendations for the period between May 26, 2025 and May 30, 2025.

NHPC Limited

NHPC share price is ₹85.98 (as on May 23, 2025) and its target price is set at ₹102 with an upside potential of 19%.

NHPC Limited: Investment Rationale

• NHPC, a Mini Ratna category I public sector utility, is primarily involved in the generation and sale of bulk power to various Power Utilities. Its other business includes providing project management/construction contracts/consultancy assignment services, and trading of power.
• The company has a presence across 15 states and 2 Union Territories in India and its total installed capacity now stands at 8,140.04 MW (including 1,681.7 MW through joint ventures), comprising 7,771.20 MW from 23 hydropower stations and 368.84 MW from six solar and one wind power project.
• NHPC’s actual consolidated capex for FY2024-25 was ₹11,596 crores. This was incurred against a target capex of ₹11,762 crores for FY2025 on a consolidated basis. The consolidated target capex for FY2025-26 is ₹13,052 crores.

• In April, the company commissioned the 800 MW Parbati-11 HE Project (hydroelectric) and 107.14 MW (out of a total of 300 MW) Karnisar Solar Power Plant. NHPC, under the Ministry of Power, is the largest hydropower development organisation in India, with capabilities to undertake all the activities from conceptualisation to commissioning of hydro projects.
• The company has successfully completed the erection of 767 ferrules for all eight lanes of pressure shaft liners at the 2000MW Subansiri Lower Hydroelectric Project on the Assam-Arunachal Pradesh border.
• Additionally, NHPC has a construction portfolio of 9,896.86 MW, including eight hydroelectric projects of 8,514 MW (including five projects of 3,134 MW under joint ventures) and seven solar projects totaling 1,382.86 MW.
• During Q4 FY25, the company reported a 52% growth in its consolidated net profit to ₹919.63 crores in the March quarter on the back of higher income. NHPC increased its Revenue from operations to ₹2346.97 crores from ₹1886.94 crores in the same quarter a year ago, an increase of 24%.

NHPC Limited: Shareholding Pattern

Promoters’ shareholding is highest in NHPC at 67.4%.

NHPC Limited: Valuation

With a strong foundation in India’s hydro power sector and an ambitious growth strategy focused on expanding its renewable energy portfolio, particularly in solar and pumped storage.

The company anticipates significant revenue increases from commissioned and soon-to-be-commissioned projects (Parbati II, Subansiri Lower), indicating a positive outlook for future capacity addition and financial performance. The focus on pumped storage highlights NHPC’s commitment to contributing to grid stability and energy transition in India.

Thus, it is expected that the stock may see a price target of ₹102 in 8 to 10 months’ time frame on a target P/BV of 2.20x and FY26 BVPS of ₹46.39.

NHPC Limited: Risk

• Geological and technical challenges in project execution
• Lower water availability and unit outages impacting PAF

KEC International Limited

KEC International share price is ₹815.10 (as on May 23, 2025) and its target price is set at ₹920 with an upside potential of 13%.

KEC International Limited: Investment Rationale

• KEC International is a global infrastructure Engineering, Procurement, and Construction (EPC) major. It has a presence in the verticals of Power Transmission & Distribution, Civil, Transportation, Renewables, Oil & Gas Pipelines, and Cables.
• The company is currently executing infrastructure projects in 30+ countries and has a footprint in 110+ countries (includes EPC, Supply of Towers and Cables). It is the flagship Company of the RPG Group.
• According to the management of the company, its total order intake for FY25 reached ₹24,600 crores, a 36% YoY growth, marking a record level. The company maintains a strong and optimistic outlook on the sector’s growth, driven by the country’s accelerating energy demands and the government’s firm commitment to expanding renewable energy and strengthening transmission infrastructure. These orders would play a pivotal role in driving its targeted growth going forward.

• In Q3 FY2025, it reported consolidated revenues of ₹5,349 crores, a 7% YoY growth, and EBITDA rose 22%, and margins expanded to 7%, the highest in three years.
• The T&D business saw a 17% YoY revenue growth, driven by strong execution in India, and a YTD order intake exceeding ₹16,000 crores. The civil business generated over ₹1,100 crores, hindered by labor shortages and delayed payments.
• The company’s T&D and cables businesses have gained momentum with multiple new orders. Key wins include 800 kV HVDC and 765 kV transmission line projects from PGCIL, and supply contracts for towers, hardware, and poles in the Americas.
• The cables segment secured orders both in India and abroad. Management remains optimistic about India’s T&D sector, backed by rising energy demand and strong government support for renewable energy initiatives.
• On the development front, it has successfully transferred its cables business to its wholly owned subsidiary, KEC Asian Cables Limited, effective January 1, 2025, marking a strategic move to streamline operations.
• It has also commissioned the first phase of its aluminium conductor plant in Vadodara. Additionally, capital investments are underway for the development of E-Beam and Elastomeric cables, with production expected to begin in Q4 of FY26. These initiatives reflect KEC’s focus on expanding manufacturing capabilities and strengthening its position in the cables segment, both in domestic and international markets.

KEC International Limited: Shareholding Pattern

In the overall shareholding of KEC International, promoters have the highest shareholding at 50.1%.

KEC International Limited: Valuation

The company’s strong order book provides clear growth visibility for the upcoming quarters. The management of the company expects robust growth in the T&D segment, driven by strong order inflows and the government’s focus on renewable energy.

The company anticipates 15% revenue growth in FY26. Margins in both civil and T&D segments are expected to improve to double digits as legacy low-margin orders conclude, boosting overall profitability and operational efficiency.

Thus, it is expected that the stock may see a price target of ₹920 in 8 to 10 months’ time frame on three year average P/BV of 4.16x and FY26 BVPS of ₹221.23.

KEC International Limited: Risk

• Geopolitical Risks
• Economic slowdown

Conclusion

These two stocks, one from the power generation sector and other from the infrastructure sector can reach their target price in the coming 8 to 10 months. However, it is always better if you do your analysis before investing and set a stop-loss target. To keep track of your invested stocks, open demat account with SMC Global Securities and invest on the go.

Reference:
https://www.smctradeonline.com/research/wise-money/241

Author: All Content is verified by SMC Global Securities.