In today’s dynamic market, understanding the SJVN Fundamental analysis is imperative. The recent 23.48% surge in share price within a month, coupled with remarkable increases of 67.14% in three months and a staggering 128.48% in six months, has captured widespread attention. When I logged into my Groww demat account this morning to assess the market trends, SJVN stood out as one of the top four most purchased stocks of the day.
This bullish trend ensued after board approval for the state-owned hydroelectric power generation company’s earnings monetization strategy, specifically focusing on the Nathpa Jhakri Hydro Power Station (NJHPS) through securitization of future return on equity.
As SJVN emerges as a prominent feature in financial headlines, esteemed platforms like MoneyControl and Economic Times have included it in their coveted lists of ‘Stocks to Watch’ for upcoming trading sessions. With SJVN primarily involved in electricity generation, a pivotal question arises: is this PSU entity a prudent long-term consideration? Let’s explore in this column of SJVN Fundamental analysis.
About the company – SJVN Fundamental analysis
SJVN Limited, a joint venture between the governments of India and Himachal Pradesh, was established on May 24, 1988. It is a Mini Ratna, Category-I, and Schedule-A CPSE that is under the administrative control of the Ministry of Power, Government of India. SJVN is presently a publicly traded company with a shareholder distribution of 59.92% government of India, 26.85% government of Himachal Pradesh, and the remaining 13.23% public. SJVN now holds a paid-up capital of Rs. 3,929.80 crore and an authorised capital of Rs. 7,000 crore. The Net Worth was Rs. 13821.97 Crore as of March 31, 2023.
The Company has completed eight projects totaling 2091.5 MW of installed capacity and 86 km of 400 KV Transmission Line since starting with a single project and a single State operation of India’s largest 1500 MW Nathpa Jhakri Hydro Power Station in Himachal Pradesh.
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News Headlines
SJVN’s Share Sale Sees Robust Response amid the healthy demand for OFS; Government to Divest 4.92% Stake
The government’s 4.92% share-sale offer in state-owned power producer SJVN received enthusiastic response, with institutional investors bidding for over 20.91 crore shares against 8.70 crore reserved for them. SJVN’s board approved the partial earnings monetization of Nathpa Jhakri Hydro Power Station through securitization. The government will divest a 4.92% stake, aiming to raise over ₹1,300 crore. SJVN’s stock price surged by 110% in 2023, reaching ₹72.27 apiece.
The Offer for Sale (OFS) witnessed robust demand, with non-retail investors subscribing 2.4 times the base size. The government’s choice to use the Green Shoe option demonstrates how strongly interested it is. The OFS is prepared to support the government’s efforts to disinvest, significantly boosting income for the fiscal year.
As of September 22, SJVN’s stock witnessed an impressive 110% surge in 2023, closing at ₹72.27 per share. However, in Q1 FY24, SJVN reported a 55% dip in net profit to ₹271.75 crore, attributed to operational adjustments. Total income also declined to ₹744.39 crore, primarily due to project phase transitions.
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SJVN’s Ambitious Growth Trajectory: A Glimpse into their Strategic Expansion Plans
SJVN’s Vision:
-5000 MW capacity by 2023-24
-25000 MW by 2030
-50000 MW by 2040
Current Portfolio:
-Total: 55,905 MW
-Operational: 2091.5 MW
-Under Construction: 4438 MW
-Pre-construction & S&I: 12678 MW
Government Recognition: Ministry of Power (MoP), GoI identifies 2507 MW capacity in Arunachal Pradesh.
Emphasis on Sustainable Energy:
-Pumped Storage Projects (PSPs): 13190 MW
-Renewable Projects: 21000 MW
Strategic Positioning: SJVN aligns with high-potential regions, exemplified by Arunachal Pradesh.
Commitment to Growth: Ambitious targets demonstrate SJVN’s proactive approach in power generation.
Visionary Leadership: SJVN’s trajectory showcases a forward-thinking stance in India’s energy landscape.
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Upcoming Projects
The upcoming projects of the company are:
-200 MW solar project from MSEDCL.
-30MW Wind-Solar Hybrid Project by SECI
-90MW Floating Solar Project at the Omkareshwar Reservoir, Madhya Pradesh
-1,000 MW Solar Power Project bagged by SJVN Green Energy Limited, a wholly-owned subsidiary of the Company at Bikaner, Rajasthan
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Essentials & Financials: SJVN Fundamental analysis
Financial Overview of Satluj Jal Vidyut Nigam (SJVN):
Operating Revenue (TTM): Rs. 2,609.03 Cr – SJVN’s substantial operating revenue demonstrates its significant presence in the power generation sector.
Annual Revenue Growth: 25% – The impressive 25% growth indicates a robust expansion in SJVN’s revenue, reflecting positive business momentum.
Market Cap: ₹ 27,689 Cr. (Large Cap)– With a large market capitalization, SJVN is considered a prominent player in the market, offering stability and scale.
ROCE: 9.27% – SJVN’s Return on Capital Employed (ROCE) of 9.27% reflects a reasonable return on investment, indicating efficient use of capital.
ROE: 10.3%- A Return on Equity (ROE) of 10.3% suggests SJVN is generating good returns for its shareholders in relation to their investments.
P/E Ratio: 27.1 (Lower than sector average of 51.1)- A P/E ratio lower than the sector average indicates that SJVN’s stock might be undervalued relative to its earnings potential.
EPS: Rs 2.60 (-18.70% YoY)– Despite a YoY decline, SJVN’s EPS of Rs 2.60 demonstrates consistency in earnings, which can instill confidence in investors.
Debt to Equity Ratio: 1.01– The higher Debt to Equity ratio suggests SJVN relies on a significant portion of debt for financing operations, potentially impacting financial stability.
Dividend (Current Year): Rs 1.77– SJVN’s dividend payout of Rs 1.77 per share reflects a commitment to returning value to shareholders.
Dividend Yield: 2.16%– A dividend yield of 2.16% is a positive sign for income-oriented investors, as it indicates a reasonable return on investment through dividends.
Face Value: Rs 10– The face value of Rs 10 suggests the potential for a future stock split, a strategic move that may enhance liquidity and accessibility for investors.
These insights provide a deeper understanding of SJVN’s financial metrics and their implications for the readers and the company’s strategic positioning.
Shareholding Pattern
| Shareholders | Sep 2023 | Jun 2023 | Mar 2023 | Dec 2022 | Sep 2022 | Jun 2022 | Mar 2022 | Dec 2021 | Sep 2021 | Jun 2021 | Mar 2021 | Dec 2020 | Sep 2020 |
| Promoter | 81.9% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% | 86.8% |
| FII | 0.9% | 1.4% | 1.8% | 2.3% | 3.0% | 2.9% | 2.7% | 2.5% | 2.5% | 2.4% | 2.3% | 2.5% | 2.8% |
| DII | 5.8% | 4.3% | 4.1% | 3.8% | 3.8% | 3.4% | 4% | 4.6% | 4.9% | 5.3% | 5.4% | 5.7% | 5.9% |
| Public | 11.5% | 7.5% | 7.4% | 7.1% | 6.4% | 6.9% | 6.6% | 6.1% | 5.8% | 5.5% | 5.5% | 5% | 4.6% |
| Others | 0.0% | 0.0% | 0.0% | 0% | 0.0% | 0% | 0% | 0% | 0% | 0.0% | 0% | 0% | 0% |
In the quarter ending September 2023, the level of promoter holdings has decreased from 86.77% to 81.85%. Similarly, FII/FPI holdings have also decreased, dropping from 1.40% to 0.91%. On the other hand, Mutual Funds have shown an increase in holdings, rising from 4.08% to 4.14%. During the same period, the number of Mutual Fund schemes has increased from 7 to 12. Furthermore, Institutional Investors have strengthened their holdings, growing from 5.73% to 6.66%.
Financial Statements- SJVN Fundamental analysis
Financial statements are an essential part of a fundamental analysis. The analysis is almost incomplete without analysing the important metrics of Income statements, Balance sheets and the Cash Flow statements. In case of SJVN Fundamental analysis, we are going to talk about some important metrics and their growth rates in the past 5 fiscal years.
Income statement| Profit and Loss Statement
Over the course of five years, spanning from March 2019 to March 2023 and the Trailing Twelve Months (TTM), SJVN’s sales revenue has experienced fluctuations, mostly on a declining trend. Starting at 2,645 crores in March 2019, it has reduced to 2,609 crores in the TTM, indicating a decline of about 1.36%.
In contrast, the company’s net profit has demonstrated a rather stagnant pattern. In March 2019, it was 1,367 crores, followed by 1,359 crores in March 2023, and further decreased to 1,022 crores in the TTM, resulting in a notable decline of approximately 25.27% from March 2019 to the TTM.
Earnings Per Share (EPS), which provides a per-share view of a company’s profitability, is another important indicator. It displays the revenue per outstanding share of the ordinary stock. The trend of EPS has fluctuated during the last five years. It began at 3.47 Rs a share in March 2019 and, after a number of swings, fell to 2.59 Rs per share in the TTM.
Summing up, the Income statement does not seem much strong. SJVN’s financial performance has faced challenges, as there is a decline in all the important metrics. Sales revenue, net profit, earnings per share all are either stagnant or is fluctuating over a period of 5 years. A company’s Income statement is healthy when it is consistent and growing.
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BALANCE SHEET
Balance sheets is a a financial snapshot of a company’s health. It is like looking at a picture of everything a company owns and owes at a particular moment.
In March 2023, the company’s liabilities stood at 28,381 crores, which represents the total amount of financial obligations or debts that the company owes. On the other hand, its assets stood at 32,311 crores, indicating the total value of resources, including cash, investments, properties, and other holdings that the company possesses. This suggests that the company’s total assets exceed its total liabilities, which is generally a positive sign. It means the company is solvent and has the potential to cover its obligations with its available resources.
A healthy balance sheet can instill confidence in shareholders and potential investors, as it indicates the company’s ability to cover its debts and potentially generate returns.
Cash Flows Statement
Operating Activities: Cash flows from operating activities decreased from 2,138 crores in March 2022 to 1,632 crores in March 2023. This suggests that the company generated slightly less cash from its core business operations during this period.
Investing Activities: Cash flows from investing activities decreased from -6,132 crores in March 2022 to -6,877 crores in March 2023. This indicates that the company spent more on investments and capital expenditures in the latter period.
Financing Activities: Cash flows from financing activities increased significantly from 3,669 crores in March 2022 to 5,559 crores in March 2023. This suggests that the company secured more funds from external sources like loans or issued shares.
Net Cash Flow: The net cash flow improved from -325 crores in March 2022 to 314 crores in March 2023. This means that the company had a positive net inflow of cash, indicating an improvement in its overall liquidity.
Position and Implications:
SJVN’s positive net cash flow and increased financing activities are positive signs. It suggests that the company managed its finances effectively in March 2023. This improved financial position can be a good sign for growth, indicating that SJVN may have the resources to invest in new projects or expansion. Additionally, the ability to generate returns in the future will depend on how effectively the company utilizes its cash.
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In summary, the improved cash flow and increased financing activities reflect a positive financial position for SJVN in March 2023, potentially supporting future growth opportunities.
SJVN peer comparison
| Company Name | Price | % Chg | MCap(Cr) | TTM PE | P/B | ROE(%) | 1 Yr Perform(%) | Net Profit(Rs.) | Net Sales(Rs.) | Debt to Equity |
|---|---|---|---|---|---|---|---|---|---|---|
| SJVN | 70.05 | 0.21 | 27,528.22 | 26.94 | 2.09 | 9.80 | 122.73 | 1,355 | 2,938 | 1.01 |
| NTPC | 238.95 | -0.15 | 231,701.84 | 12.98 | 1.67 | 11.50 | 51.28 | 16,341 | 176,206 | 1.50 |
| Power Grid Corp | 199.15 | -0.10 | 185,221.53 | 12.17 | 1.99 | 18.57 | 27.84 | 15,499 | 45,581 | 1.52 |
| Adani Power | 373.55 | -0.48 | 144,075.95 | 9.80 | 7.70 | 65.35 | 1.58 | 10,726 | 38,773 | 2.56 |
| Adani Energy | 826.45 | 1.26 | 92,189.89 | 74.05 | 8.36 | 10.77 | -77.06 | 1,280 | 13,292 | 2.93 |
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Highlights Of Earning And Revenue For SJVN- Annual/Quarterly
In the past year, SJVN experienced significant growth in its financial performance. The annual revenue surged by 24.6%, reaching Rs 3,282.5 Crores. Simultaneously, the net profit for the year showed impressive growth, rising by 37.3% to Rs 1,359.3 Crores. The stock price also demonstrated exceptional strength, soaring by 130.2%, surpassing the sector average by an impressive 115.6%.
However, the most recent quarterly results showed a different picture. There was a notable decline in both revenue and net profit compared to the same quarter the previous year. Specifically, quarterly revenue dropped by 32.8% year-on-year, amounting to Rs 744.4 Crores. Additionally, quarterly net profit experienced a significant decrease of 55.4% year-on-year, settling at Rs 271.8 Crores.
These figures indicate a dynamic period for SJVN, with substantial annual growth but a more challenging quarterly performance. It’s essential to closely monitor future financial reports to gain a comprehensive understanding of the company’s trajectory.
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BOTTOM LINE
Summing up SJVN Fundamental analysis, the company’s earnings for the last quarter are 0.66 INR whereas the estimation was 0.92 INR which accounts for -28.26% surprise. Company revenue for the same period amounts to 6.75B INR despite the estimated figure of 8.25B INR. Estimated earnings for the next quarter are 1.03 INR, and revenue is expected to reach 8.68B INR. SJVN has shown strong points, but it also deals with ups and downs, especially in its quarterly performance. To gauge its future growth and stability, it’s important to stay informed about market trends and financial updates.
That’s all for today’s post. Hope you get some valuable insights from here.
Happy reading!
Disclaimer
The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.
