Why is hydropower as a sector in NEPSE booming lately? After banking & insurance is it the time for hydro?
Wed, Jun 1, 2016 11:52 AM on Latest, Exclusive, Featured, Stock Market,
Hydropower has increased by 9.36% amounting to 2655 points on May 31. This could be among the highest single day gains for any domain in NEPSE. An obvious question would be whether this gain is rational or not? Or is it just a part of the big game? Apart from the gain, the sector has also shown tremendous growth in turnover reaching 36.9 crores. The turnover is second highest for the day ending the month, which is close to commercial bank which remained at 45.6 crores. There has been mounting interest in the segment within few days which might seem to be a boon for the investors and power developers surreally; however, this is among the pioneer sectors in the market which has led to the significant growth of index. At the present, government has been providing a grant of 50 lakhs per MW for the power developers as an effort to encourage the developers.
When we look at the performance of the six months period, for banking, hydropower and NEPSE, both banking and NEPSE have outperformed hydropower in terms of change. While the index grew by 47.65%, there was meager growth of 29.27% for the power index. As hydropower is among the most promising arena as of date in our context, the growth was due sooner or later. The fact that we have been purchasing power incurring a considerably higher cost shows the prospects of power development in days to come. The response from the share market is certainly commendable though delayed. The kilometer long line for the recent IPO of project developing tentatively 6 MW power shows the future of hydro power.
With only eight companies developing power, trading in NEPSE at present, there might be significant crusade in the sector in days to come. While there are delegate coming to Nepal Power Investment Summit from various countries with aspiration to invest in the power generation the response from investors in exchange is apparent. We certainly see potential in the segment though company specific analysis and more importantly the business they have would be crucial to determine the future growth and returns for the investors.
While some companies may not be performing ideally as it is only the beginning for them, the venture undertaken by them should be prioritized which is obvious pointer of future performance. With government dedicated to generate 10,000 MW power within ten years, there should be significant attraction for general investors in this segment. Establishment of Hydroelectricity Investment and Development Company Ltd and the concept of organizations like Power Corporation along with bank for financing power development highlight the potential for early birds who have seen the prospects before everyone else.
Dinesh Singh Mahat
ShareSansar
When we look at the performance of the six months period, for banking, hydropower and NEPSE, both banking and NEPSE have outperformed hydropower in terms of change. While the index grew by 47.65%, there was meager growth of 29.27% for the power index. As hydropower is among the most promising arena as of date in our context, the growth was due sooner or later. The fact that we have been purchasing power incurring a considerably higher cost shows the prospects of power development in days to come. The response from the share market is certainly commendable though delayed. The kilometer long line for the recent IPO of project developing tentatively 6 MW power shows the future of hydro power.
With only eight companies developing power, trading in NEPSE at present, there might be significant crusade in the sector in days to come. While there are delegate coming to Nepal Power Investment Summit from various countries with aspiration to invest in the power generation the response from investors in exchange is apparent. We certainly see potential in the segment though company specific analysis and more importantly the business they have would be crucial to determine the future growth and returns for the investors.
While some companies may not be performing ideally as it is only the beginning for them, the venture undertaken by them should be prioritized which is obvious pointer of future performance. With government dedicated to generate 10,000 MW power within ten years, there should be significant attraction for general investors in this segment. Establishment of Hydroelectricity Investment and Development Company Ltd and the concept of organizations like Power Corporation along with bank for financing power development highlight the potential for early birds who have seen the prospects before everyone else.
Dinesh Singh Mahat
ShareSansar
