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 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

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)

(2077/78* is unaudited numbers till Poush)

(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.