Financial Stress Deepens in Nepal’s Hydropower Sector as Over Half Reports Weak Book Value

Nepal’s hydropower sector is facing mounting financial pressure, as revealed by recent third-quarter earnings disclosures. Out of the 89 hydropower companies listed on the Nepal Stock Exchange (NEPSE), 31 have reported negative earnings per share (EPS), signaling that over one-third of the sector is currently operating at a loss.

At the profitable end, Sahas Urja Limited (SAHAS) stood out with an impressive EPS of Rs. 29.41, reflecting robust earnings. On the other hand, Mandakini Hydropower Limited (MCHL) posted a dismal Rs. –45.03 EPS, underscoring significant financial strain.

Concerns deepen further when evaluating book value, a key indicator of a company’s net asset worth. Butwal Power Company Limited (BPCL) leads the pack with a book value of Rs. 207.60, highlighting strong fundamentals. In contrast, Divyajyoti Hydropower (DHPL) reported a dangerously low book value of Rs. 4.53, signaling near-total erosion of shareholder equity.

Worryingly, more than half, 48 out of 89, of these companies have a book value below Rs. 100, raising red flags about their financial soundness and long-term viability. This trend not only highlights underlying structural issues in the sector but also poses challenges for investors seeking stability and value in hydropower stocks.

Analysts suggest that operational delays, high project costs, and regulatory uncertainty may be contributing to the sector\\\