Share price of hydro subgroup continues to rise
KATHMANDU, FEB 18:
Though hydropower companies failed to repeat the similar surge in profit observed earlier in the first quarter of the current fiscal year, their stock prices have continued to rise.
The net profit of three among the four listed hydropower companies has registered a decline of 14 per cent in the second quarter of the current fiscal year as compared to the corresponding quarter of last fiscal year, according to the unaudited financial results of Arun Valley Hydropower (AHPC), Butwal Power Company (BPCL) and Chilime Hydropower Company (CHCL). National Hydropower Company (NHCL) — the fourth listed hydro company — last published its quarterly financials up to the third quarter of fiscal year 2010-11.
In the first quarter, hydropower companies registered a 14 per cent growth in net profit. They were able to observe a 54 per cent growth in the fourth quarter of fiscal year 2011-12.
These three companies earned Rs 682.36 million as net profit in the second quarter while a year back their profit stood at Rs 795 million. Arun Valley Hydropower and Chilime Hydropower have both increased their profit but Butwal Power Company’s profit slumped in the second quarter. BPCL’s profit suffered due to losses arising from foreign exchange rate adjustment and higher interest payment.
Despite the contraction in profit growth, share prices of Butwal Power increased by Rs 20 to Rs 770 this week. The possible rights issue of the company is supposedly fuelling the price hike of stocks of Butwal Power. On the other hand, the share price of Arun Valley has slumped by Rs 15 to Rs 315 even though it had registered a growth of 37 per cent in profit.
Likewise, share price of Chilime Hydropower has gone up by Rs 57 to Rs 1127 in the week’s trading as the only ‘A’ listed hydro company’s profit increased by eight per cent last quarter.
Market capitalisation of hydropower companies stands at only Rs 30 billion — making only six per cent of total market capitalisation. “Hydropower companies do not make up a large part of the stock market so any good performance of the hydro companies fails to affect the overall market,” said stock analyst Rabindra Bhattarai.
“Hydropower companies are guaranteed a steady income as their power sales are certain so they earn steady profits. Investors are willing to pay more for their shares as they also give handsome dividends,” said Bhattarai.
Based on last year’s return, Chilime, Butwal Power and Arun Valley have distributed good dividends. CHCL distributed 20 per cent cash and 30 per cent stock dividend, while Butwal Power provided 25 per cent cash dividend and Arun Valley has announced 0.75 per cent cash and 15 per cent stock dividend.
The average Price to Earning Ratio of the subgroup stands at 42 showing investors are paying 42 times more than the earnings of the subgroup.
Source: THT
