LAXMI SHARMA
KATHMANDU: Almost half of the hydropower companies listed on the Nepal Stock Exchange (NEPSE) are reporting losses in the third quarter of the current fiscal year. Despite this, their shares are being traded at high prices. For example, the share prices of loss-making hydropower company stood between Rs 144.80 and Rs 768.90 per share on Thursday. Specifically, the shares of National Hydro, which is operating at a loss, were traded at Rs 144.80, and Shubham Power’s shares, also in loss, were bought and sold at Rs 768.90. Barahi Hydropower Company’s share price stood at Rs 724 per share.
Currently, 89 of the 91 hydropower companies listed on NEPSE have released their financial statements for the third quarter. Out of these, 46 are profitable, while 43 are in loss. Two companies have not yet published their third-quarter financial statements.
Several new companies have not started selling electricity yet, and some have incurred losses due to last year's floods affecting their income. Despite these losses, many of these companies' share prices remain high in the secondary market of securities. Some companies have been running at a loss for years, while others have only recently begun to experience losses. Analysts warn that investors buying shares of consistently unprofitable companies at high prices might fall in financial traps.
Investor Tara Prasad Fullel notes that the share prices of loss-making companies increased abnormally as investors focused on current profits rather than overall financial health. Fullel advises that investors should consider the company's overall financial situation and the status of founder shareholders before investing.
Another investor, Radha Pokharel, explains that investors are currently more interested in buying and selling shares of companies with fewer shares in the market rather than those that are profitable. She suggests that investors prioritize market attractiveness over financial stability, noting that even profitable companies have seen declining dividend rates in recent years, providing less benefit to shareholders. Therefore, investors tend to favor companies with more attractive shares in the market.
Upper Tamakoshi Hydropower Company has reported the most significant losses among the loss-making hydropower companies, with losses exceeding Rs 1.39 billion by the third quarter. Its share price is Rs 158.20 per share. The company’s share price declined after listing 100% rights shares issued by the company. Experts point out that even if a company is in loss, it can still pay dividends if its reserves are sufficient. They recommend that long-term investors seeking dividends should choose shares of companies with a history of good dividends. For short-term investments, they advise considering the investment amount and market trends.
