Why SJVN Share Price is Rising

2023 was a phoenix-like year for India's listed PSUs.

Riding a wave of government investment in infrastructure and domestic manufacturing, these public sector companies witnessed a Rs 2 trillion (tn) surge in marketcap.

One in three PSU stocks on the index smashed over 100% returns in this dream run, leaving past struggles firmly in the dust.

The Nifty PSE index became the star performer of 2023, skyrocketing by a whopping 81%.

But amid this electrifying rally, one PSU stock has truly stolen the show, SJVN. This power sector player has rocketed over 10% already in 2024, reaching its all-time peak.

So, what's fuelling this stellar performance?

#1 Formation of Four Joint Venture Companies

SJVN, on 2 January 2024, received approval from the Department of Investment & Public Asset Management (DIPAM), the Ministry of Finance and the Government of India for its proposal to form four Joint Venture (JV) companies in India & Nepal.

These JV companies will be formed to develop hydro and renewable projects in India and Nepal.

SJVN will be the lead partner in three of these JV companies, while its wholly-owned subsidiary, SJVN Green Energy Ltd., will be the lead partner in the fourth JV.

The company will form a JV with Maharashtra State Power Generation Company Ltd. to develop renewable energy projects of 5,000 MW.

The second JV will be between SJVN, the government of Arunachal Pradesh and Navyuga Engineering company to execute the development of the 1,878 MW Oju Hydro Electric Project in Arunachal Pradesh.

SJVN will collaborate with the Nepal Electricity Authority and GMR Energy in the third JV to implement a 900 MW Upper Karnali Hydro Electric project in Nepal. SJVN and GMR will have an equal equity partnership in this JV.

Lastly, SJVN Green Energy Ltd. will form a JV with Assam Power Development Company to develop 1,000 MW Renewable Energy projects in Assam.

Combining its hydro, solar, wind, and thermal power businesses, SJVN's project portfolio currently stands at 56,000 MW, with a presence across India and Nepal.

This has fuelled the rally in the stock.

#2 Commissioning of Solar Power Plant

SJVN's subsidiary, SJVN Green Energy, on 1 January 2023, launched the Gurhah solar power project in Jalaun, Uttar Pradesh, generating 75 megawatts.

They secured this project at a rate of Rs 2.9 per unit. The agreement for power purchase, spanning 25 years, has been finalized with Uttar Pradesh Power Corporation (UPPCL).

The cost of Construction / Development of this project is Rs 408.42 crore. The project will generate 159.7 million (m) units in the first year and the estimated cumulative energy generation over 25 years shall be 3,716 m units.

This will further result in revenues of around Rs 480 m per annum. With the commissioning of this Gurhah Solar Power Project, the total installed capacity of SJVN is now 2227 MW.

This accomplishment played a pivotal role in contributing to the positive momentum of SJVN's overall performance.

#3 Construction Finance Facility

Apart from this, on 29 December 2023, SJVN secured a Rs 100 billion (bn) construction finance facility to fund its upcoming renewable energy projects from a group of leading domestic and international lenders.

The construction finance facility is a unique and first-of-its-kind transaction undertaken by a PSU entity and Public Sector Banks.

SJVN Green Energy Limited (SGEL), a wholly-owned subsidiary of SJVN Ltd, undertook this initiative in association with SBI Capital Markets Ltd (SBI CAPS).

SBI CAPS acted as the sole advisor and arranger for the transaction on behalf of SGEL. Construction finance attracted a tremendous response from lenders and was over-subscribed.

After detailed discussions and deliberations, proposals from five banks, Deutsche Bank, State Bank of India, Punjab National Bank, Bank of India, and MUFG Bank, were accepted.

This credit facility is of a revolving nature that allows SJVN to draw down funds on an ongoing basis as per the construction requirements of its projects.

This facility will help SJVN to fast-track the development of its under-construction RE projects.

The facility will enable SJVN to contribute towards the government's target of achieving 500 GW of renewable energy by 2030.

The construction financing facility will be deployed strategically to develop state-of-the-art solar and wind energy projects across India.

The details of this first-of-its-kind transaction undertaken by a PSU entity and public sector banks have been declared in an event organised by SBICAPS.

What Next?

The company is marching forward with vigour to achieve its mission of 12,000 MW by 2026 and shared a vision of 25,000 MW by 2030 and 50,000 MW installed capacity by 2040.

SJVN has ambitious plans to expand its renewable energy capacity. Over the next three years, the company aims to add 10,000 MW of renewable energy capacity.

Additionally, 16 projects with a total capacity of 4,500 MW are under construction. SJVN's ultimate portfolio envisions a capacity of 55,000 MW.

The management outlined the commissioning of 54 projects within the next three years, with 10 in the first year, 19 in the second year, and 25 in the third year.

Further, the government's goal of meeting 50% of its energy demand from clean energy sources by the end of the decade positions public-sector enterprises like SJVN favourably.

SJVN has a robust background in hydropower generation and a successful track record in implementing wind and solar energy projects.

How Shares of SJVN have Performed Recently

The SJVN stock rose around 199% in the past one year. Over a month, the share price has gained by 8.3%.

SJVN share price touched its 52-week high price of Rs 104.9 on 17 January 2024. Its 52-week low was Rs 30.4 touched on 27 March 2023.

The company is currently trading at a PB (price to book value) multiple of 2.8 times.

About SJVN

SJVN, formerly known as Satluj Jal Vidyut Nigam, is an Indian public sector undertaking involved in hydroelectric power generation and transmission.

It was incorporated in 1988 as Nathpa Jhakri Power Corporation, a joint venture between the Government of India and the Government of Himachal Pradesh.

The company has a total operating hydropower capacity of 1,912 MW through its two hydropower plants - Nathpa Jhakri and Rampur.

In addition, it has an installed capacity of 97.6 MW of wind power and 81.9 MW of solar power.

SJVN is presently implementing or operating power projects in Himachal Pradesh, Uttarakhand, Bihar, Maharashtra, Uttar Pradesh, Punjab, Gujarat, Arunachal Pradesh, Rajasthan, Assam, Odisha, Mizoram, and Madhya Pradesh in India.

Apart from India, SJVN also has under-construction hydroelectric projects in Nepal and Bhutan.

To know more about the company, check out the SJVN fact sheet and quarterly results on our website.

You can also compare SJVN with its peers:

SJVN vs Torrent Power

SJVN vs Indian Energy Exchange

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