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Pros and Cons of Investing in NHPC and Adani Enterprises Shares

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Synopsis:

NHPC and Adani Power shares present contrasting investment opportunities. NHPC, an Indian public sector company, focuses on hydropower projects, offering stable returns and lower risk. Adani Power, a private sector company, engages in thermal and renewable energy, promising higher growth potential but with increased volatility. Investors must weigh NHPC’s stability against Adani Power’s dynamic growth prospects when making decisions.

The power sector is emerging as an attractive investment avenue for both types of investors: foreign and domestic. The reason behind the same is simple: the industry offers a huge growth potential. There are several factors like the government's policies, the growing demand for energy, and a positive shift towards renewable sources of energy that are helping the power sector grow. Thus, also enhancing their prices.

Power stocks have huge growth potential and market demand which you may use to earn huge capital benefits. Looking for an investment in the power sector? Here are the top two avenues for investment in power stocks: Adani Power & NHPC Limited.

About Adani Enterprises Shares

  • Adani Power is the leading private organisation in India's thermal power generation arena. 

  • The company comes under the parent organisation called Adani Groups. 

  • With thermal energy generation of around 15,250 megawatts, the power plants of Adani Power are spread across India, including Karnataka, Rajasthan, Jharkhand, Chandigarh, and so on.¹

  • The company's huge thermal power generation capacity, robust infrastructure, and futuristic outlook offer a huge potential for growth making it an attractive investment destination. 

Pros and Cons of Investing in Adani Power

As mentioned, Adani Power is a significant name in the power generation field. Meaning if you choose to invest in Adani Power, your chances of earning returns on your investment are pretty high. Here are a few compelling reasons supporting Adani Power investment as a good choice. 

Pros of Investing in Adani Power:

  • Diversified Portfolio

Adani Power is engaged in thermal as well as other kinds of renewable energy generation including solar projects. Thus, when you invest in Adani Power, you diversify your portfolio and minimise the risk coming from an individual revenue stream.

  • Positive Performance

The company showcases positive performance with its market cap value standing at 2,67,768 crores.² With a leading market position and high returns on equity, revenue growth rate, and other financials in comparison to its competitors Adani Power investment is an attractive option. 

  • Long-term Benefits

Adani's approach towards their future growth is super positive. They aim to plan their growth and expansion using India's growing reliance on renewable energy sources. Thus, investing in Adani Power can help you earn long-term benefits.

While investing in Adani Power can help you earn in several ways, you also need to understand that it has a few disadvantages. Here are a few cons you must check before investing in Adani shares.

Cons of Adani Power Investment:

  • Adani Power has a Beta of 1.76. This beta signals moderate risks. Meaning if you're looking for stable and steady returns, this may not be your ideal choice. 

  • The company pays 0.00% of dividend yield to its shareholders.³

About NHPC Shares

  • Set up in 1975, NHPC or National Hydroelectric Power Corporation is the strongest pillar of hydroelectric generation in the country. 

  • Being a PSU and one of the leading organisations in the power sector, NHPC Limited is responsible for the growth and development of the infrastructure of hydroelectric plants across the country. 

  • The company offers a diversified portfolio with its dedication extending beyond hydropower generation. It also covers renewal sources of wind and sun. 

Pros & Cons of Investing in NHPC Limited Shares

With a diversified portfolio and an ability to offer long-term benefits, here are a few pros of investing in NHPC shares.

Pros of Investing in NHPC Shares

  • Robust Financial Health 

    The financial performance of NHPC Limited shares has been great in recent days. If you follow their performance, you can see net profits of 569.47 crores⁴ in March 2023 and a rise in their EBITDA by 10%⁵. Reasons like this make NHPC a preferred energy share.  

  • Expansion Potential 

    What appeals more to the investors is the company's huge potential for expansion. Currently leading in hydropower generation, the company is also looking to make a mark in solar power generation. Very recently, the company signed an agreement with the GEDCOL, for the development of 500 MW of solar power.

  • Attractive Dividend Yields

    For investors who look for stable returns on their investment, dividend yield is an important metric. If you see dividend yield as an important factor for your investment, then you may consider picking NHPC. They offer favourable yields of around 4%, where you earn dividend payouts and other returns from your investment. 

Cons of Investment in NHPC Limited Shares

While there are several advantages of investing in NHPC Limited shares, consider taking a look at a few cons before finalising your investment plan. 

  • Return on equity and EPS growth rate are not too high or favourable. 

  • The share price is prone to volatility given the market conditions and in case of calamities. 

Conclusion

For someone planning to diversify their portfolios and with a keen interest in the energy or sustainable sector, renewable energy shares like that of Adani Power or NHPC Limited can be an ideal choice. With positive financial metrics and a sustainable futuristic approach, both companies have the potential to earn high returns in the future. Thus, helping you enhance your ROI. However, it is important to understand that even these shares can go through ups and downs given a variety of factors including government plans, market conditions, and more. Consider all these factors to make an informed investment decision.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

Frequently Asked Questions

What are the main advantages of investing in NHPC shares?

Answer Field

Investing in NHPC shares offers a bunch of advantages. For example, they offer strong financials, assuring you of profits, high dividend yield, company's positive performance, and valuation, helping you earn long-term benefits.

What are the risks associated with investing in NHPC shares?

Answer Field

The common risks associated with investing in NHPC shares are related to consumer behaviour, market volatility and the occurrence of natural hazards.

Why should I consider investing in Adani Enterprises shares?

Answer Field

You can consider investing in Adani Enterprises shares because of the several benefits they offer. With investment in Adani Enterprises, you can build a diversified portfolio, reduce your risk, and earn returns owing to the company's futuristic and sustainable approach and great performance.

What are the potential drawbacks of investing in Adani Enterprises shares?

Answer Field

The high beta stocks showcase risks, plus, the 0.00% dividend yield for the shareholders are some of the potential drawbacks of investing in Adani Enterprises shares.

What factors should I consider before deciding to invest in NHPC or Adani Enterprises shares?

Answer Field

Before deciding to invest in NHPC or Adani Enterprises shares, consider looking into the fundamentals and financial health of both companies, and understand their metrics, market volatility, risks involved, and their potential for growth and expansion in the near future.

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