Can Upper Tamakoshi change the fate of Hydropower Companies in stock market? 4.13 crore unit shares to start trading from Rs 74.90 – Rs 224.70

Fri, Jan 11, 2019 3:07 PM on Exclusive, IPO/FPO News, Stock Market,

- Puskar Shrestha

After about a month after the allotment of ordinary shares of Upper Tamakoshi Hydropower Company, 10.52 crore unit shares of the company have found its way in the secondary market.

The shares of the company were floated through 3 stages which included issue for employees of promoter companies and member of EPF, the issue for locals of Dolkha district and issue for the general public.

The hydropower company has floated the largest number of shares for any public company in Nepal with ‘Grade 4’ credit rating indicating below average fundamentals.

The first phase of issuance had floated 2,54,16,000 unit shares which were allotted to 2,08,041 applicants. The applicants included 1,91,959 members of EPF, 9,754 staffs of the hydropower company and Nepal Electricity Company, 5,550 staffs of Nepal Telecom, 480 staffs of EPF, 191 staffs of Rastriya Beema Sansthan and 107 staffs of CIT.

Similarly, in the second phase of issuance, 1,05,90,000 units were floated for the locals of Dolkha district. The issue was simplified by segregating the project affected area into three categories namely ‘A’, ‘B’ and ‘C’. The shares were allotted to 2,76,194 applicants from the different project affected areas.

In the third phase of issuance total, 1,58,85,000 units were floated for the general public which included 1,50,90,750 for the general public and 7,94,250 units for the mutual funds. The shares were allotted to 3,34,075 valid applicants.

The company currently consists 8,18,310 shareholders holding the ordinary shares of the company.

With the listing of the shares in the secondary market being made yesterday, the stock market is sure to be flooded with the shares of Upper Tamakoshi when its transaction will start on Sunday. As the lock-in period for the 1st phase issue has already ended on Jestha 2075, 5,42,116 shareholders have been eligible to trade 4,13,01,000 unit shares.

What can be its listing price?

The offer letter of the hydropower company reported its net worth per share for the FY 2073/74 as Rs 74.90. So, it is likely, that the IPO will be listed in open range from Rs 74.90 – Rs 224.70.

What is the market’s sentiment towards the shares of Upper Tamakoshi?

The Nepalese stock market has still not found its mojo as it still tends to bleed a few points every trading day. The inclusion of a huge number of shares of Upper Tamakoshi Hydropower will increase the market capitalization but the chances of it garnering huge rise in its price are rather slim. The speculation is based primarily on the basic concept of “Law of Supply” which states that the price decreases with the rise in supply. And incase of the shares of Upper Tamakoshi, the supply is huge which might directly affect the price of the stock in the short term.

It should also be noted that the company’s project has not yet completed and it might take a while for the completion of project and production of electricity to begin. However, for the investors eyeing on long term prospect of the shares, Upper Tamakoshi is one of the most promising companies in the stock market.

Condition of other hydropower companies in the stock market

The hydropower conditions are well known for their lack-luster performance in the stock market. If we compare the performance of recently listed hydropower companies, LTP of Ankhukhola Hydropower Company stands at Rs 94, Kalika Power Company stands at Rs 100 and Panchakanya Mai Hydropower Company stands at Rs 115. Only Joshi Hydropower has been trading above Rs 200 among the recent hydropower companies as its LTP stands at Rs 274. So, the hydropower company with the largest number of shareholders will have a huge task ahead of itself.

The start of trading in the shares of Upper Tamakoshi, which will begin from Sunday, will mark a historical date in Nepalese stock market for 4,13,01,000 units shares will be available for trade.

Did you apply in Upper Tamakoshi's IPO today? Either yes or no; find out the story behind Upper Tamakoshi and the perspective of Chief of the company; Mr. Bigyan Prasad Shrestha