Chilime and Butwal power in the lead among hydropower companies! Know more about the sector's status

Sun, Mar 10, 2019 2:36 PM on Exclusive, Financial Analysis, Stock Market,

We cannot deny the potentiality of the development of our country lies in the water infrastructures. The abundant rivers, glaciers and lakes in Nepal shows that water resources can be a foundation for the infrastructural development of the country. One of the sectors that can make optimum utilization of water resources is hydropower sector. However, have the hydro powers been able to make a sustainable utilization of the water resources? The problem of power cut has been solved through the management of current resources. However, the question remains: have hydropower companies been able to boost up their productivity?

The provided are the existing 25 hydropower companies listed in NEPSE:

Four of the listed companies have not published their Q2 reports. They are PMHPL, UPPER, JOSHI and GHL.

Financial statements can further be an answer to the questions, investors have about the performance of this sector. Therefore, the article promotes reader’s understanding on hydropower fundamental evaluation based on these indicators:

Net profit:

As per the net profit of second quarter of 2075/76, Butwal Power Company Limited is in the lead with a profit of Rs 75.82 crore. Similarly, Chilime Hydropower Company (CHCL) has the second highest net profit of Rs 45.31 crore in the same quarter. The hydro powers with negative profit are Dibyashwari Hydropower Company Limited (DHPL) and Khani Khola Hydropower Company Limited (KKHC).

Paid up capital:

Chilime Hydropower Company Limited (CHCL) has the highest amount of paid up capital worth Rs 4.75 arba followed by Butwal Power Company Limited (BPCL) with paid up capital of Rs 2.44 arba.

Reserve and surplus:

Chilime Jalavidhyut Company Limited (CHCL) has maintained its lead in reserve and surplus of Rs 4.42 arba. Butwal Power Company Limited (BPCL) has maintained second position with Rs 4.22 arba reserve and surplus fund. Investors are requested to note down the hydro powers with negative reserve and surplus are AKPL (-1.49 crore), DHPL (-10.07 crore), SPDL (- 11.79), AKJCL (-18.57 crore), KKHC (-35.69 crore) and NHPC (-41.49 crore).

Income from sales of electricity:

The sale of electricity is the main source of income for hydro power companies. Therefore, any investors should consider the income from sales of electricity of a hydropower company while making investment decision. Chilime hydropower (CHCL) again maintained its lead with an income of Rs 62.43 crore. It is further followed by Sanima Mai Hydropower (SHPC) and Butwal Power Company (BPCL) with an income of Rs 44.84 crore and Rs 21.75 crore respectively.

Major indicators:

Earnings per share (Annualized):

Nepalese investors often regard EPS as the base of their investment decision. The top position, is occupied by Butwal Power Company Limited (BPCL) with a quarterly EPS of Rs 31.07 per share. EPS of BPCL is not annualized because a major part of its net profit belongs to dividend income so an annualized EPS may not reflect the true picture. Similarly, it is followed by Sanima Mai Hydropower Limited (SHPC) with EPS of Rs 19.79 and Chilime Hydropower Company Limited (CHCL) with an EPS of Rs 19.05.

P/E Ratio:

Nepal Hydro Developer Limited (NHDL) has the least PE ratio of 7.29 times. It is further followed by Radhi Bidyut Company Limited (RADHI) with P/E ratio of 10.73 times.

Net worth per share:

The highest net worth per share among these hydropower companies is Rs 273.21 of Butwal power Company Limited (BPCL). Chilime Hydropower Company Limited (CHCL) has the second highest net worth per share as of Q2 of FY 2075/76 i.e. Rs 192.90.

A full picture:

Finally the table below provides a full picture with major indicators of the hydropower companies as of the second quarter of FY 2075/76:

Provided the analysis, what is your opinion regarding hydropower companies? Do you think for a country with abundant water resources, there should be only two hydro power companies leading on the top of the chart? As an investor, have you lost your confidence in this sector? Or, are you positive towards this sector due to the absence of power cut which is the new achievement?

Please feel free to drop a comment below.