Company Analysis: Hydroelectricity Investment and Development Company Ltd.
Mon, Sep 28, 2015 1:37 PM on Latest, Exclusive, IPO/FPO News, Company Analysis, Stock Market,
Hydroelectricity Investment and Development Company Ltd. (HIDCL) was established on 11th July 2011 as a specialized development financial institution to mobilize resources and cater to the needs of investments in hydroelectricity generation, transmission and distribution projects.
The company has a paid up capital of Rs.10 billion of which Rs.5 billion has been contributed by the government of Nepal and Rs.1 billion each from Employee Provident Fund, National Insurance Corporation and Citizen Investment Trust. The company intends to collect Rs.2 billion through a public issue. This will be the second largest IPO in the history of Nepal.
The company intends to invest its funds through debt or equity exclusively in middle and mega hydro projects (15MW and above).
So far, HIDCL has provided financing commitments to 8 hydropower projects with 8 other projects being in various stages of appraisals. It also has a wholly owned subsidiary (Remit Hydro Ltd.), which further plans to invest in hydropower projects. HDICL also holds 14% equity in Power Transmission Company Nepal (PTCNL).
The company has distributed 5% cash dividends to its shareholders from its accumulated earnings till FY 2070/71.
CEO's Profile
Mr. Deepak Rauniar, Chief Executive Officer
Mr. Rauniar holds a Master of Business Administration -Executive degree from Pokhara University (Ace College of Management), Nepal and a Master of Computing (Research) degree from Monsah University, Australia. He also holds a Bachelor of Engineering degree in Computer Science and Engineering degree from BUET, Bangladesh. He has also received several prestigious international scholarships and fellowships.
Mr. Rauniar has more than eighteen years of professional experience in Nepal and abroad. He was the Deputy Chief Officer at Employee Provident Fund, Nepal and was a member of BOD at Clean Energy Development Bank Ltd. since 2008.
Key Financial Highlights
Investment Commitments by HIDCL
Challenges and Prospects
The biggest challenge for the company will be to mobilize its funds effectively. So far, HIDCL has provided financing commitments to 8 hydropower projects. Despite these commitments, the actual investment of the company is negligible. Of the total investment commitments of Rs.3230 million only Rs8.4 million has been mobilized so far.
The main income of HIDCL has been interest income it has received from various banks where it has parked its funds.
However, the future prospects of the company are immense. Nepal, with its huge potential for hydroelectricity and limited capital, requires funds for developing its hydel sector and HIDCL is sure to play a key role in this regard.
Its subsidiary, Remit Hydro, has already applied for the license of 2 hydropower projects (71 MW and 53 MW) in eastern Nepal.
The company has an unparalleled advantage in being backed by the Government of Nepal. International agencies such as ADB and the World Bank are likely to mobilize their funds through government backed organization rather than private banks.
For investors, the company’s share prices are likely to hover around Rs.150 to Rs.200 for a couple of years after its IPO. This is assuming that the company’s earning per share remain at or around Rs.5 (very likely given that investments in hydel take a long time to begin yielding returns) and a PE ratio of 30 to 40 times (the current PE ratio of hydel sector is 40). Another factor that will contribute to keeping the prices low is the huge supply of its shares. The company is likely to become the second largest listed company in NEPSE after Upper Tamakoshi Hydropower Company Ltd.
However, after its investments begin yielding returns, the prices are sure to rise.
CEO's Profile
Mr. Deepak Rauniar, Chief Executive Officer
Mr. Rauniar holds a Master of Business Administration -Executive degree from Pokhara University (Ace College of Management), Nepal and a Master of Computing (Research) degree from Monsah University, Australia. He also holds a Bachelor of Engineering degree in Computer Science and Engineering degree from BUET, Bangladesh. He has also received several prestigious international scholarships and fellowships.
Mr. Rauniar has more than eighteen years of professional experience in Nepal and abroad. He was the Deputy Chief Officer at Employee Provident Fund, Nepal and was a member of BOD at Clean Energy Development Bank Ltd. since 2008.
Key Financial Highlights
Investment Commitments by HIDCL
Challenges and Prospects
The biggest challenge for the company will be to mobilize its funds effectively. So far, HIDCL has provided financing commitments to 8 hydropower projects. Despite these commitments, the actual investment of the company is negligible. Of the total investment commitments of Rs.3230 million only Rs8.4 million has been mobilized so far.
The main income of HIDCL has been interest income it has received from various banks where it has parked its funds.
However, the future prospects of the company are immense. Nepal, with its huge potential for hydroelectricity and limited capital, requires funds for developing its hydel sector and HIDCL is sure to play a key role in this regard.
Its subsidiary, Remit Hydro, has already applied for the license of 2 hydropower projects (71 MW and 53 MW) in eastern Nepal.
The company has an unparalleled advantage in being backed by the Government of Nepal. International agencies such as ADB and the World Bank are likely to mobilize their funds through government backed organization rather than private banks.
For investors, the company’s share prices are likely to hover around Rs.150 to Rs.200 for a couple of years after its IPO. This is assuming that the company’s earning per share remain at or around Rs.5 (very likely given that investments in hydel take a long time to begin yielding returns) and a PE ratio of 30 to 40 times (the current PE ratio of hydel sector is 40). Another factor that will contribute to keeping the prices low is the huge supply of its shares. The company is likely to become the second largest listed company in NEPSE after Upper Tamakoshi Hydropower Company Ltd.
However, after its investments begin yielding returns, the prices are sure to rise.
