Why SJVN Share Price is Rising

Editor's note: Power stocks have received increased attention from investors these days. And you can't blame them. Earlier, there was a lingering question whether power stocks are value buys or value traps. The rally in the past couple of months in select stocks has left the critics wondering.

This surge comes from the simple fact that power stocks have been trading at bargain prices. Therefore, amid the current market scenario, where the broad stock market is trading close to record highs, long-term investors are increasingly finding power stocks appealing.

One such company from the sector is SJVN, which has rallied over 25% in the past one month. In the past six months, the stock has rallied around 122%.

In June 2023, we covered a detailed editorial explaining the reasons why the stock is rising and what lies ahead. There have been major developments since then.

Continue reading...

Why SJVN Share Price is Rising

In the last one month, benchmark indices have seen a dream run with both the Sensex and Nifty reaching all-time highs.

Tracking the performance of the indices, many stocks also rallied on the bourses. One of them was SJVN.

The stock is up around 10% in the last five days. In fact, yesterday it touched its all-time high of Rs 42.9.

So, what is the reason behind the recent rally?

Let's find out...

Green energy push by government sets off rally

SJVN's shares surged more than 7% to hit an all-time high in intraday trade on the BSE on 25 June after the government directed all states and union territories (UTs) to prepare a renewable energy (RE) plan, with a focus on land acquisition, to help achieve India's target of 500 gigawatts (GW) of RE capacity by 2030.

The directive comes at a time when the government has set a target of bidding out 50 GW each year, starting from the current financial year. Implementing these projects will require land, which is primarily owned or controlled by states.

Every state has been asked to prepare and submit its plan to the centre. Once vetted by the government, the states will release the plans to the public so that developers get some direction on available land parcels.

SVJN has set a target of achieving 50,000 MW of installed capacity by the year 2040, with a contribution of 96% from non-fossil fuels.

Hence, the company saw a jump in its share price.

Update: As expected, once the government directed states to come up with a plan, select regions started allocating orders to state run and private firms. SJVN bagged multiple projects from Punjab State Power Corporation and the Government of Arunachal Pradesh in July 2023.

From Arunachal govt, it received five projects of 5,097 MW. From Punjab State Corp, it secured a contract for the development and procurement of 1,200 MW of solar power entailing an investment of Rs 70 bn.

Reportedly, the development of these projects will involve an investment of more than Rs 500 bn. So the company has already inked an initial pact with REC for securing finance of Rs 500 bn for projects of its subsidiaries and joint ventures.

If this was not enough, SJVN again received a big order from Madhya Pradesh for 90 MW of solar power on 11 August 2023.

Healthy order book to drive growth

SVJN recently announced that it has signed a Memorandum of Understanding (MoU) with Maharashtra State Power Generation Company (MAHAGENCO) for the development of 5,000 MW renewable energy projects.

The MoU was signed to explore the feasibility of setting up various renewable projects in Maharashtra, which include hydro, pumped storage, wind, solar, hybrid, and green hydrogen projects.

SJVN's subsidiary, SJVN Green Energy, also bagged a 200 MW wind power project entailing an investment of Rs 14 bn in tariff-based competitive bidding conducted by Solar Energy Corporation of India.

The wind power project will be developed by SJVN Green Energy anywhere in India through an engineering procurement construction (EPC) contract.

It also received certain orders last month. For instance, SJVN bagged a 100 MW solar power project worth Rs 6 bn from Rajasthan Urja Vikas Nigam.

In fact, the rise in its order book is not new. The company's order book saw steady growth since the beginning of the financial year 2023.

Along with all its subsidiaries, SVJN has received orders worth Rs 9.3 billion (bn) during the year.

Adding to its healthy order book, SJVN recently won orders for a solar power project.

The company's green energy arm signed a power purchase agreement (PPA) with Bhakra Beas Management Board to develop an 18 MW solar power project.

SJVN Green Energy will develop the project in Himachal Pradesh and Punjab. This project is scheduled to be commissioned by August 2024.

The project will generate 39.42 million units of energy in the first year of operation and the cumulative energy generation over a period of 25 years would be about 917 million units.

Sound financials to support growth

For the financial year ended March 2023, SJVN reported total sales of Rs 29.4 m, up 19% YoY. Widespread demand for renewable energy and increasing order book boosted the company's revenue growth.

The profit jumped to a whopping 37% compared to last year. This was driven by reducing input prices and efficient use of its hydro plants.

SJVN Annual Financial Performance

Particulars	FY23	FY22	YoY growth
Total Revenues (Rs in m)	29,383.50	24,170.00	5,213.50
Profit after tax (Rs in m)	13,593.00	9,898.00	3695
Basic EPS	3.5	2.6	0.9

Source: Equitymaster

The company also incurred the highest-ever capex in the year under review. In FY 2023 it incurred a capex of Rs 82.4 bn as against the target of Rs 80 bn which was set by the government of India. In the last six financial years i.e. between financial year 2018-2023, the company's capex spending went up by a whopping 1,925%.

Update: On 9 August 2023, SJVN reported a drop of 55% in its consolidated net profit to Rs 2.7 bn on account of lower revenues.

How SJVN share price has performed recently

In the past five days, SJVN's share price went up by 9.4%. On a YTD basis, it gained around 100%.

In the past one year, it has rallied 122%.

SJVN shares touched a 52-week high of Rs 70.8 today and a 52-week low of Rs 29.9 touched on 30 September 2022.

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

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...