NHPC scrip skyrockets, but can it maintain the momentum?(EXCLUSIVE)

ShareSansar, May 2

National Hydropower Company Limited (NHPC) scrip is hitting back-to-back circuit for the past few days following a series of news that has boosted the confidence of the shareholders and investors alike.

The scrip, which was priced at Rs 55 when its trading resumed in April last year, was traded at Rs 173 on the lasting trading day of the week on Wednesday.

 “One of the reasons is that the shareholders somehow came to know that the court will not initiate action against the NB group (which is one of the promoter groups) on banking or financial crime – at least of the time being,” says President of the Brokers’ Association Narendra Sijapati.

Issuing an interim order on a case pertaining to loan defaulted by the NB Group on Nepal Bangladesh Bank’s case, the Appellate Court has just asked the central bank to let them free involve in shares, banking and other business activities since the case is sub judice and also being handled by the Debt Recovery Tribunal.

Sijapti added that the growth of hydropower companies in the recent weeks could be another major reason for the hike the price of NHPC scrip.

President of Nepal Investors’ Forum Raj Kumar Timilsina, too, feels that the current surge in the price of NHPC scrip is basically about the sectoral growth effect.

Both the factions of the company, too, agree that the sectoral growth, coupled with the recent news that how the transmission line will affect Sanima Mai Hydropower Company’s plan to generate power, has led to the surge in NHPC scrip.

“NHPC scrip is relatively much cheaper as compared to most of the hydropower companies in the market,” says Yogendra Rai, who leads the NB Group faction in the company.

“Sanima Mai apparently has fallen by the wayside. Even if it had managed to complete the production by Ashad, it won’t be in a position to give full-fledged dividend for many years. On the other hand, NHPC has now cleared most of its credit, has transmission line and is generating electricity. But the scrip is still almost five times cheaper compared to Sanima. This has appreciated the price of our scrip,” he added.

 Prakash Rajaure, who heads the faction close to share investor Nirmal Pradhan, too, echoed Rai’s voice in that the sectoral growth plus the news of Sanima Mai’s transmission line problem propelled the price of NHPC scrip.

“Moreover, the company has already cleared most of its loan due despite the factionalism largely due to the arrangement to handover the earning directly to the bank (Nabil),” Rajaure added. “The company could soon be in a position to start distributing dividend. Little wonder that the price of NHPC scrip has risen significantly over the past few days.”

Another reason that NHPC has reached an agreement with Nabil Bank Limited to finance Sunkoshi hydropower project, Sijapati added.

Some brokers involved in trading of NHPC scrip say that the impression in the market that the two factions of the company are trying to settle the row has also made the investors a bit upbeat.

The trading of the scrip had resumed after a long hiatus after the company managed to renew the RTS agreement with Growmore Merchant Banker in March, which sent a positive signal to the market and appreciated the price of the scrip.

This had come shortly after Nepal Stock Exchange Limited (NEPSE) issued a stern warning to the crisis-ridden company if they failed to put their acts together to renew the RTS agreement.

The market had responded positively to the development, and there were buyers for more than 50,000 units of NHPC scrip at the circuit level of Rs 126 on the very first day.

Though the disputes between the two factions still seem very complicated and challenging, both the factions have not given up the hope to amicably resolve the problem.

What is more encouraging is the fact that the officials from both the groups have told ShareSansar that they have more or less agreed that the ball is now in the court of the judiciary, and they will accept whatever the verdict be.

Asked whether NHPC scrip will continue to surge in days to come, many of the key stakeholders, including Brokers’ Association President Sijapati opined that the share may breach Rs 200 level.

One of the leading broker, who did not wanted to be identified, said that he won’t be surprised if NHPC scrip reached as high as Rs 350 within the next few months.

The company whose shares traded at as high as Rs 600 when stock market was surging to an unprecedented level around eight years back went on a free fall when company ran into rough weather due to extremely poor and non-transparent corporate governance.

To further complicate the problem, two groups of promoters – each led by notorious NB Group and Nirmal Pradhan — have been staking claim over the company over the recent years.

And, due to the row between the two groups, NHPC had not been able to renew the agreement with its RTS, Grow More Merchant Bank since Mangshir.

The group led by Rajaure and Rai had issued separate notices earlier this month, asking the investors to transfer the ownership of NHPC scrips traded up to February 17 by March 21.

It may be noted here that the scrip had breached the par after a hiatus of four years in February as the investors hoped that the crisis might be over soon following the rumor of the renewal about the renewal of the contract with the RTS.

Though the regulator has not been able to take a bold stance on the festering issue and NEPSE has even withdrawn the trading suspension of NHPC shares since June following the Patan Appellate Court’s decree, the brokers had not been trading the shares.