Things to know for prospective investors about IPO of Ru Ru Jalbidhyut Pariyojana Limited; high chance of lottery for 10 units

Thu, Apr 1, 2021 1:49 PM on IPO/FPO News, Exclusive, Stock Market, Company Analysis,

-ShareSansar

Company Profile:

Ru Ru Jalbidhyut Pariyojana Limited (RJPL) is a leading hydropower development company limited in Nepal with diverse and experienced professionals. It was incorporated on March 22, 2006, as a private company which was later converted into a public limited company on July 23, 2015. It is mainly focused on hydropower development and consulting business and has been successfully instigating various projects. RJPL operates a 5 MW project named Upper Hugdi Khola Hydropower Project located in Gulmi district of Province-5 of Nepal. The project came into operation on March-23, 2015.

About the Issue:

Ru Ru Jalbidhyut Pariyojana Limited is issuing 407,705 units of ordinary shares worth Rs. 4.89 crores to the general public from Chaitra-20 at a premium of Rs. 20. The early closing date of this IPO issue is on Chaitra-24, 2077. If this issue is not subscribed till Chaitra-24, 2077 then the issue will be extended up to Baisakh-03, 2077.

The company is set to issue a total of 4,07,706 units of shares i.e., 10% of the total issued capital from Chaitra-20, 2077. From the total of 4,07,706 units, 20,385 units i.e. 5% are for the Mutual Fund. 2% of the total units i.e. 8,154 units are for the employee of the company, and the remaining 3,79,167 units are for the general public.

Applications can be placed for a minimum of 10 units and a maximum of 379,167 units.

NMB Capital Limited has been appointed as the issue manager for the IPO issuance.

Ru Ru Jalbidhyut Pariyojana Limited:

Particulars	Percentage	Units	Amount
Total Capital	100%	4,077,055	407,705,500
Total Issue	10%	407,706	48,924,720
Employees	2% of IPO Units	8,154	978,480
Mutual Fund	5% of IPO Units	20,385	2,446,200
General Public	93% of IPO Units	379,167	45,500,040
Issue Manager	NMB Capital Limited
Issue Open Date	Chaitra-20, 2077
Issue Closing Date (earliest)	Chaitra-24, 2077
Issue Closing Date (Late)	Baisakh-03, 2078
Minimum Application	10
Maximum Application	379,167

(NOTE: The total amount considers the premium of Rs. 20)

ICRA Rating:

ICRA Nepal has assigned a grading of [ICRANP] IPO Grade 3, indicating average fundamentals, to the proposed initial public offering (IPO) of NPR 89.695 million of Ru Ru Jalbidhyut Pariyojana Limited.

Credit Strengths:

Improving generation trend
Low project development cost to support profitability and return parameters
Low tariff risk, given long-term PPA at predetermined tariffs and escalations
Experienced promoters and management team

Credit Challenges

Exposure to interest rate volatility and rising operating costs amid fixed tariff structure
High hydrology risk, given lack of deemed generation clause in PPA

(Source: ICRA Nepal)

Capital Structure:

Authorized Capital	500,000,000
Issued Capital	407,705,500
Current Paid-Up Capital	326,164,400
Capital after IPO Issuance (Local and General Public)	407,705,500

Shareholding Structure:

	Number of Shares	Amount	Percentage	Remarks
Promoters Shareholders	3,269,644	326,964,400	80%	Already Issued
Project affected locals	407,705	40,770,500	10%	Already Issued
General Public	407,706	40,770,600	10%	To be Issued

Board of Directors:

Board of Directors
Name	Position
Mr. Aashitwa Subedi	Director
Mr. Bharat Prasad Nepal	Director
Mr. Min Raj Kandel	Director
Mr. Gam Prasad Regmi	Director
Mr. Chandra Bahadur Pun	Director

Projects:

Name of Project	Upper Hugdi Khola Jalabidhyut Aayojana
Type of Project	Run-Of-River
Installed Capacity	5 MW
Annual Energy Generation	28.26 GWh
Annual Dry Energy	5.49 GWh
Annual Wet Energy	22.77 GWh
Total Cost	Rs. 74.94 crores
Cost per Mega-watt	Rs. 14.89 crores
Annual Revenue	Rs. 15.54 crores

Financial Highlights:

Particulars	Actual				Estimated
Particulars	2074/2075	2075/2076	2076/2077	2077/2078*	2077/2078	2078/2079	2079/2080
Total Paid-Up Capital ('000)	326,164.00	326,164.00	326,164.00	326,164.00	407,706.00	407,706.00	407,706.00
Reserve & Surplus ('000)	32,639.00	35,674.00	61,447.00	116,396.00	85,214.00	107,905.00	124,241.00
Debt ('000)	408,803.00	343,236.00	324,738.00	261,429.00	172,208.00	118,364.00	59,613.00
Revenue ('000)	122,197.00	123,552.00	146,693.00	92,537.00	133,506.00	129,168.00	119,962.00
Interest Expenses ('000)	44,612.00	43,019.00	36,581.00	13,720.00	24,469.00	13,873.00	8,759.00
Net Profit ('0000	34,116.00	35,650.00	58,389.00	54,950.00	58,529.00	63,462.00	57,107.00
Earnings per share (Rs.)	10.46	10.93	17.90	16.85	14.36	15.57	14.01
Net worth per share (Rs.)	110.01	110.94	118.84	120.90	120.90	126.47	130.47
Debt-Equity (times)	1.14	0.95	0.84	0.59	0.35	0.23	0.11
Return on Equity (%)	9.51%	9.85%	15.06%	12.42%	11.87%	12.31%	10.74%

Trends of key parameters:

Reserve

(2077/78* is unaudited numbers till Poush)

Profitability:

(2077/78* is unaudited numbers till Poush)

How much to apply?

When we observe the current scenario, investors have shown a high level of confidence, which is shown by the huge demand for the last few months. Almost all of the stocks have been trading significantly higher than they were before lockdown.

When we look at the current trend of IPO in the market, we see that more than 18 lakhs of investors have been applying in the recent issue’s which is a huge number when we compare it with past applicants. This shows that, even if a quarter of this number applied for the issue of Ru Ru Jalbidhyut Pariyojana Limited (RJPL), the issue will be oversubscribed. Since the "10 kitta rule" still holds true for IPO; 37,916 applicants will be lucky enough to get the 10 unit shares of Ru Ru Jalvidhyut. So, it is advisable to apply only 10 units.