Hydropower companies are those companies which are concentrated to generate electricity. Income of hydropower is hugely contributed by power sales whereas it may also include interest income from Bank and Financial Institutions (BFIs) where the hydropower has kept their money. Moreover, due to holding of other companies shares either in hydropower companies or in other BFIs, dividend income has been vital source of generating income, for instance in the second quarter (Q2) of ongoing FY 2074/75, Butwal Power Company Limited (BPCL) has succeed to cater dividend income of Rs 49.60 crore which strengthen the income base of the company.
Till date, 17 hydropower companies (HIDCL not included as it is hydro investment company not hydropower) have been listed in Nepal Stock Exchange for trading and many hydropower companies are seeking approval to float Initial Public Offering (IPO) from the Securities Board of Nepal (SEBON). This clearly shows the clear view of massive attraction towards this sector. But this charm will continue only if, companies can create more and more wealth to its shareholders, otherwise, the sentiment of investors will change and they will shift to other sectors where they anticipate good return of the money they invest.
Talking about performance of existing listed hydropower companies, few companies have performed well whereas most of the companies are still struggling to make handsome profit. Today, we are here with the In-Depth analysis of 17 hydropower companies as per the unaudited report published by the respective companies till the end of Q2, FY 2074/75.
Below table constitute major fundamental factors and ratios:
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(Note: Table is sorted in descending order of the hydropower’s Q2 2074/75 EPS. For P/E ratio, Market Price per Share as on Falgun 10, 2074 is taken into consideration. BARUN and KKHC marked with red have not yet published their Q2 FY 2074/75 report. EPS of RHPC, NHPC and DHPL are also marked with red because it varies with the EPS as stated in their respective quarterly report.)
From the above table, BPCL whose 40.81 unit FPO shares is ongoing stood at the table with impressive Earning Per Share (EPS) of Rs 38.80 whereas its net worth per share is also high at Rs 258.22 and P/E ratio is also attractive with only 8.23 times. (Note: while calculating EPS of BPCL, net profit excluding dividend income of Rs 49.60 crore is not annualized as dividend are received only once in a year. For clarification, Net profit taken into consideration = (Rs 59.92 crore - Rs 49.60)*2 + Rs 49.60 crore = Rs 70.24 crore).
BPCL is followed by Chilime Hydropower Company Limited (CHCL) with EPS of Rs 26.46 and net worth per share of Rs 215.23. HPPL, AKPL, NHPC and DHPL are the 4 hydropower companies suffering from losses.
In terms of investment, CHCL has invested huge sum of Rs 5.91 arba in its sister companies whereas BPCL has also invested Rs 1.75 arba. Beside these 2 hydropower companies, API, RHPC, AHPC, SHPC, SPDL and DHPL have also invested some funds.
CHCL has capital base of Rs 3.96 arba and reserve of Rs 4.56 arba which is quite higher than leading BPCL. In terms of power sales also, CHCL come in front with Rs 63.21 crore. But though power sales of Rs 40.98 crore, BPCL succeed to earn net profit of Rs 59.92 crore as its profit is strengthen by dividend income of Rs 46.90 crore from its sister company, Himal Hydro.
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Disclaimer: This article is solely based upon the presumptions of the author(s). Therefore, investors are asked to use their own judgment, seek financial advises from the trusted independent investment pioneers and financial consultants. Invest at your own risk).
