CLSA sees NHPC shares doubling in four years, helped by projects on fast-track after Indus treaty suspension

New Delhi, June 23, 2025:
Leading global brokerage CLSA has projected a bullish outlook on NHPC Ltd., India’s largest hydropower company, estimating that the company’s shares could double in value over the next four years. The optimism comes in the wake of India's strategic decision to fast-track hydropower infrastructure projects following its move to suspend participation in the Indus Waters Treaty (IWT) with Pakistan earlier this year.

Suspension of Indus Waters Treaty Reignites Strategic Push

The Indus Waters Treaty, signed in 1960, regulated water-sharing between India and Pakistan. However, citing national security concerns and strategic autonomy, India put the treaty on indefinite hold in early 2025. The move allowed India to exercise greater control over river flows originating from its territory—particularly in Jammu & Kashmir and Himachal Pradesh.

This decision has cleared the decks for NHPC to accelerate long-pending and stalled hydropower projects in these regions, which were previously subject to international oversight and prolonged clearances. As a result, NHPC has already revived three major projects totaling over 3,200 MW in capacity, which had been in limbo for nearly a decade.

“This is a strategic inflection point for NHPC. With regulatory hurdles cleared and strong government backing, the pace of execution is expected to rise significantly,” said CLSA in its latest research note.

CLSA Forecast: Doubling by FY29

According to CLSA analysts, NHPC’s current share price does not fully reflect the scale of opportunity ahead. The brokerage has raised its target price to ₹138, implying more than a 100% upside from current levels around ₹66. This forecast assumes a CAGR (compound annual growth rate) of 18–20% in earnings over the next four fiscal years.

The revised valuation is underpinned by:

• The addition of 5–6 GW in capacity by FY29

• Higher tariffs from new-generation assets

• Government push for renewable and clean energy under India’s Net Zero 2070 pledge

CLSA also cited NHPC’s strong balance sheet, cash flows, and minimal debt as buffers that allow for aggressive capex without undermining shareholder returns.

“We believe NHPC’s ROE could rise from the current 10.5% to above 14% by FY29, making it an attractive defensive growth play,” CLSA noted.

Market Context: Hydropower Back in Focus

India’s hydropower sector, once overshadowed by solar and wind, is regaining investor attention. The Centre has recently introduced policy incentives for pumped storage hydropower projects, which offer round-the-clock clean energy—a crucial capability for stabilizing the grid as renewable penetration increases.

NHPC, with its long-standing expertise in hydro, stands to gain disproportionately from these policy shifts. The company has also ventured into green hydrogen pilot projects and is exploring tie-ups with global players to diversify its revenue streams.

Market participants are beginning to take notice. NHPC shares have rallied over 30% year-to-date, outperforming the Nifty Energy index. Institutional interest is rising, with mutual funds and sovereign wealth funds reportedly increasing their stakes in the company.

Analyst Opinions Mixed, But Outlook Remains Positive

While CLSA has issued a strong buy recommendation, other brokerages remain moderately optimistic.

“Execution remains the key,” said Ankit Mehta, energy sector analyst at Emkay Global. “NHPC’s historic delays in project timelines are a concern, but if political and regulatory will holds, this could indeed be a multi-year rerating story.”

Jefferies and Motilal Oswal have also raised their earnings projections for NHPC but have maintained a “Hold” rating, citing valuation concerns in the short term.

Investor Outlook: Low-Risk, High-Potential Play

For long-term investors seeking stability with growth, NHPC is increasingly viewed as a quasi-PSU defensive stock in the energy space. With government ownership exceeding 70%, the company enjoys policy support, while still offering exposure to high-return infrastructure expansion.

“NHPC is at the cusp of transformation—from a sleepy PSU to a core pillar of India’s energy transition,” said Ritu Kedia, fund manager at Kotak Asset Management. “The risk-reward looks highly favourable, especially when compared to thermal utilities.”

Dividends, too, offer additional appeal. NHPC has consistently maintained a dividend yield of around 4%, adding to the total shareholder return.

The suspension of the Indus Waters Treaty has created a watershed moment for NHPC, and institutional optimism—led by CLSA’s bullish forecast—reflects a changing narrative for the hydropower major. With execution discipline and continued policy tailwinds, NHPC could indeed chart a high-growth trajectory over the next few years.

Disclaimer: The views and forecasts quoted in this article are those of brokerage analysts and do not constitute investment advice. Investors are advised to consult their financial advisors before making investment decisions.