Sahas Urja Limited (NEPSE: SAHAS) — Investment Report

Executive Summary

Sahas Urja Limited (NEPSE: SAHAS) is a Nepali hydropower independent power producer (IPP) whose audited standalone accounts contain exactly one revenue-generating asset: the 86 MW Solu Khola (Dudh Koshi) run-of-river plant in Solukhumbu, with commercial operation date 1 March 2023 (17 Falgun 2079). Power is sold to the Nepal Electricity Authority (NEA) under a take-or-pay Power Purchase Agreement (PPA) signed in 2015, valid for 30 years from commercial operation date or generation-licence expiry (approximately 2050), whichever is earlier. (Source: SAHAS verified financial file, audited annual reports FY2077/78–FY2081/82 — Primary.)

Around this operating asset sits a 56.67%-owned subsidiary, Times Energy Pvt. Ltd., the developer of the 341 MW Budhi Gandaki Peaking Run-of-River (PRoR) project in Gorkha. Financial close for Budhi Gandaki was achieved in August 2025 (NPR 52.5 billion facility, 10 banks). Construction has not commenced as of July 2026; first generation is expected approximately 2030–2032. (Source: Kathmandu Post and NEA public releases — Secondary.)

Two corrections to prior published material: (1) The Solu Khola PPA tariff is NPR 4.80/kWh (wet season) / NPR 8.40/kWh (dry season) — not NPR 14–16/kWh as stated in the April 2026 version of this article. (2) Solu Khola's plant load factor (PLF) is approximately 60–62% (FY2080/81: 59.8%, FY2081/82: 61.9%, Derived) — not 97% as the prior article stated. The 97% figure conflated NEA-contracted-energy achievement with installed-capacity PLF; the true PLF against 86 MW installed capacity is approximately 60–62%, which is normal-to-good for a Nepali run-of-river plant. (Source: SAHAS verified financial file — Primary; tariff sourced from NEA/press — Secondary.)

At NPR 662 (reference price, 24 July 2026 — Secondary), approximately NPR 17 billion — roughly 57% of the NPR 30.3 billion market cap — is the implicit market value of Sahas's Budhi Gandaki stake, a project that will not generate revenue before approximately 2030–2032 and sells 70% of its 1,867.77 GWh of contracted energy at the ordinary wet-season rate of NPR 4.80/kWh. This is the central analytical observation of the July 2026 analysis.

Business Overview

Solu Khola (Dudh Koshi) — the operating asset. The 86 MW run-of-river plant at Solukhumbu reached commercial operation in March 2023. Revenue is electricity sales to NEA under a take-or-pay PPA: tariff NPR 4.80/kWh wet season / NPR 8.40/kWh dry season (Secondary, sourced from NEA/press — not disclosed in audited filings), with 3% annual escalation for the first five years (ending approximately FY2028), then flat nominal. No consolidated Group statements have been filed; all audited P&L, balance sheet, and cash flow figures relate to the standalone Company (Solu Khola operation plus parent-level). (Source: SAHAS audited annual reports — Primary; tariff: NEA/media — Secondary.)

Times Energy Pvt. Ltd. — the development subsidiary. Sahas raised its stake in Times Energy from 26.67% (associate, FY2080/81) to 56.67% (subsidiary, FY2081/82) via additional equity injections. The investment is carried at cost: NPR 1,100,000,000. Sahas's stated ultimate target stake is 51% — implying a planned sell-down and public capital raise into Times Energy, which would dilute Sahas's look-through economics. (Source: SAHAS FY2081/82 Annual Report, Note — Primary.)

Budhi Gandaki PPA tariff. The 341 MW Budhi Gandaki PRoR PPA (concluded 26 June 2024) is: NPR 10.55/kWh peak-dry season / NPR 8.40/kWh dry season / NPR 4.80/kWh wet season (Secondary). Of Budhi Gandaki's contracted 1,867.77 GWh annual output, approximately 1,304 GWh (70%) is wet-season energy at the ordinary NPR 4.80/kWh rate. This makes Budhi Gandaki's blended realized tariff approximately NPR 6.25/kWh (Derived: 1,304 × 4.80 + 320 × 10.55 + 244 × 8.40 = approximately NPR 11,683 million ÷ 1,867.77 GWh ≈ 6.25/kWh) — only modestly above Solu Khola's current realized tariff. The gross revenue projection is approximately NPR 11.7 billion per year at steady state (Estimate — see inputs below) — not the NPR 14–16 billion stated in the prior published analysis. (Source: NEA/press/financial-close announcement — Secondary; calculation: Derived, Estimate.)

Financial Performance

All figures NPR millions, standalone Company (Solu Khola operation). Source: SAHAS audited annual reports FY2077/78–FY2081/82 — Primary, company self-reported. Pre-COD years (FY2077/78–FY2079/80) include IFRIC-12 construction income recognized on an assumed 17.94% project IRR — not electricity sales.

Five-Year Standalone Financial Summary

*FY2077/78 and FY2078/79 "profit" is IFRIC-12 construction income on an assumed 17.94% IRR — not electricity sales. Do not treat as operating earnings.

Source: SAHAS verified financial file — Primary.

Key structural observations from the five-year data.

First, the operating business is cash-backed. OCF exceeded PAT in every year (FY2081/82: OCF NPR 1,242 million vs PAT NPR 895 million). The take-or-pay PPA provides genuine cash-conversion quality. (Source: SAHAS verified financial file — Primary.)

Second, the income tax line is zero across all five years — the plant operates under a 100% hydropower income tax exemption for 10 years from commercial operation (approximately 2023–2033) under §11(3d) of the Income Tax Act 2058, then 50% exemption for a further five years (approximately 2033–2038). Post-2038, the full hydro tax rate of approximately 20% applies. Normalized-tax PAT (FY2081/82): approximately NPR 716 million (895 × 0.80, Derived). Normalized ROE approximately 10.3% (vs reported 12.9%, Derived). (Source: SAHAS verified financial file — Primary; Income Tax Act 2058 §11(3d) — Primary.)

Third, project debt is deleveraging on schedule. Medium-and-long-term (M&LT) project debt fell from NPR 9,883 million at peak (FY2079/80) to NPR 9,177 million (FY2081/82). Finance cost fell from NPR 1,165 million (FY2080/81) to NPR 798 million (FY2081/82, −31%), the primary driver of the PAT improvement. Short-term bridge loans are rising (to NPR 1,491 million, FY2081/82) as Sahas funds Budhi Gandaki equity injections.

Fourth, the NEA receivable grew from NPR 323.7 million (FY2080/81) to NPR 412.1 million (FY2081/82) — +27.3% against revenue growth of +8.2%. Receivable days approximately 56.8 days (Derived: 412.1 ÷ 2,648.2 × 365). This is the first-order indicator of sector-wide NEA payment stretch and the key working-capital metric to monitor. (Source: SAHAS verified financial file — Primary.)

EPS — not disclosed in company filings. The Company does not disclose EPS in any of the five annual reports. Derived FY2081/82 EPS: approximately NPR 19.6 (PAT NPR 895.1 million ÷ 45.738 million shares post-21% bonus, Derived). (Source: SAHAS verified financial file — Primary.)

Quarterly Snapshot

FY2082/83 quarterly data are portal-sourced (not filed quarterly PDFs on disk); figures are Secondary.

• H1 FY2082/83 PAT: NPR 905 million — already equal to 101% of full-year FY2081/82 PAT (NPR 895 million) in six months. This reflects the wet-season revenue skew (H1 approximately 64% of annual revenue) plus rapid finance cost reduction. (Source: ShareHub Nepal — Secondary.)
• 9M FY2082/83: portals show annualized EPS 34.48 (on 45.738 million shares) → annualized PAT approximately NPR 1,577 million → implied 9-month PAT approximately NPR 1,183 million. (Derived from portal EPS; Secondary.)
• Analytical estimate (Estimate): full-year FY2082/83 PAT approximately NPR 1,500–1,580 million; EPS approximately NPR 33 (inputs: 9M annualized, adjusted for Q4 dry-season step-down; invalidated if finance cost reduction or generation differ materially from trend).

The pattern confirms two structural facts: (a) revenue is heavily wet-season-weighted (H1 approximately 64% of annual revenue), and (b) finance cost is declining fast as M&LT debt amortizes — the primary near-term earnings driver. (Source: SAHAS verified financial file and portal data — Primary/Secondary.)

Market Position

Operating scale. Solu Khola at 86 MW is a small fraction of Nepal's approximately 3,500 MW grid-connected national fleet. Single operating segment, single counterparty (NEA), single river.

Plant load factor (PLF). FY2080/81: 59.8%; FY2081/82: 61.9% (Derived: generation 450.7 GWh and 466.6 GWh respectively ÷ 86 MW × 8,760 hours). This is normal-to-good for a Nepali run-of-river plant — not exceptional. Note: the April 2026 published article stated 97% PLF; this was an error arising from conflating NEA-contracted-energy achievement with installed-capacity PLF. The 97% figure is incorrect. (Source: SAHAS verified financial file — Primary.)

Tariff vintage. Solu Khola's PPA tariff (NPR 4.80 wet / NPR 8.40 dry) is among NEA's cheaper power commitments. Per the Nepal hydro industry report, older, cheaper-tariff plants are the last NEA curtails in a wet-season glut — a genuine competitive quality signal for the operating asset.

Realized tariff trend. Blended realized tariff: approximately NPR 5.29/kWh (FY2079/80), NPR 5.43/kWh (FY2080/81), NPR 5.68/kWh (FY2081/82, Derived: revenue ÷ generation). The rising trend reflects the 3% × 5-year PPA escalation, which ends approximately FY2028. After FY2028, the nominal tariff is flat — locked-in real-tariff erosion for approximately 22 of the remaining approximately 24 PPA years. (Source: SAHAS verified financial file — Primary.)

Budhi Gandaki — project position. A 341 MW PRoR is strategically scarce on NEPSE (peaking/semi-reservoir capacity is rare among listed hydros). Financial close achieved August 2025: NPR 52.5 billion facility, 10 banks. EPC: China Energy Engineering Group and Everest Power (Secondary). Construction not yet commenced as of July 2026. (Source: NEA/Kathmandu Post financial-close announcement — Secondary.)

Regulatory and Macro Context

Tax holiday. Under §11(3d) of the Income Tax Act 2058, 100% of hydropower income is tax-exempt for 10 years from COD (approximately 2023–2033), then 50% for a further five years (approximately 2033–2038). This is a genuine, durable legislative benefit for approximately 7–12 more years. It also flatters reported ROE relative to long-run normalized earnings — investors valuing SAHAS on reported PAT are implicitly valuing a temporary regulatory subsidy as permanent.

PPA regime. Standard NEA PPA: take-or-pay structure, 30-year term, tariff set by the Electricity Regulatory Commission (ERC) grid code. The 3% × 5-year escalation is a standard feature for recently-signed PPAs; Solu Khola's escalation is broadly consistent with new-build economics at the time of signing.

NEA counterparty. NEA is state-owned and sovereign-backstopped. Its financial position has been under pressure as take-or-pay IPP power purchase obligations grew 28.6% on 8.5% revenue growth in FY2081/82 (industry report). The sector-wide "NEA receivable stretch" is the primary systemic risk to Nepali IPP cash flows. (Source: Nepal hydro industry report — Secondary.)

Hydropower export. Nepal concluded transmission-sharing arrangements for power export to India and Bangladesh. Cross-border exports in the wet season reduce NEA curtailment risk for all IPPs, a macro tailwind for the sector. (Source: Nepal hydro industry report — Secondary.)

Governance and Capital Allocation

Board and ownership. No single shareholder holds 5% or more in any of the five audited years. Chairman Him Prasad Pathak (1.36%) and Managing Director Sushil Thapa (1.40%) have held board seats across all five years and maintain personal equity positions — a genuine alignment signal. The FY2081/82 AGM replaced three directors with two public directors and one independent director (Bibhuti Ojha — the single independent seat on a board steering a NPR 70 billion subsidiary project). (Source: SAHAS verified financial file — Primary.)

Director compensation. Chairman total compensation approximately NPR 7.23 million, MD approximately NPR 4.55 million (FY2081/82, Derived from verified notes). Combined approximately NPR 11.8 million ≈ 1.3% of PAT — notable for what is largely an autopilot asset post-COD. (Source: SAHAS verified financial file — Primary.)

Capital allocation record. Share issuances: 24.5 million → 35 million (public issue, NPR 1.05 billion) → 37.8 million (NPR 280 million cash issue) → 45.738 million (21% bonus in FY2082/83). Dividends: nil FY2077/78–FY2080/81; NPR 294.7 million cash paid in FY2081/82; 21% bonus plus 1.1053% cash proposed for FY2081/82. Budhi Gandaki equity investment: NPR 500 million (FY2080/81) → NPR 1,100 million (FY2081/82). Approximately NPR 8–9 billion additional equity still required to fund Sahas's share of Budhi Gandaki's NPR 17.5 billion equity component. (Source: SAHAS verified financial file — Primary.)

Related-party and intercompany flows. NPR 134.9 million advanced to the Budhi Gandaki project, classified in Other Current Assets; NPR 55.3 million of BGHEP project development cost capitalized as Intangible Assets under Development, to be reimbursed from the subsidiary on SPA completion. Both are soft intercompany receivables that age badly if Budhi Gandaki underperforms. (Source: SAHAS FY2081/82 Annual Report, notes — Primary.)

Auditor. Changed twice in five years (Wagle → R. Sapkota → I. Dhakal). All opinions unqualified. The FY2078/79 emphasis-of-matter (IFRIC-12 income booked on a management-assumed 17.94% project IRR) is noted but does not affect the operating-period analysis. (Source: SAHAS verified financial file — Primary.)

Key Risks

Budhi Gandaki execution and dilution. The project is NPR 70 billion, approximately 6 years from first generation, and contributes nothing to current audited earnings. Approximately NPR 8–9 billion of additional equity is required from Sahas alone. The Share Purchase Agreement structure (95% agreed → 56.67% held → 51% target) signals a planned sell-down and public capital raise into Times Energy — a dilution event that would reduce Sahas's look-through economics in the project it is funding. Cost overruns or construction delays are a systematic risk in Nepal's large-hydro track record. (Source: SAHAS FY2081/82 Annual Report, Notes — Primary.)

Solu Khola as a wasting asset. The offtake licence expires approximately 2050 — approximately 24 years remaining — with approximately zero terminal value. The 3% × 5-year tariff escalation ends approximately FY2028, leaving approximately 22 years of flat nominal / declining real tariff against rising O&M and royalties. The post-tax-holiday normalized ROE is approximately 10.3% (vs reported 12.9%, Derived). A finite-life asset with locked-in real-tariff erosion is correctly valued with no terminal value in DCF.

NEA payment stretch. The NEA receivable grew +27.3% against revenue growth of +8.2% in FY2081/82 (days 48.3 → 56.8, Derived). For a single-counterparty IPP, sustained receivable-days expansion above 90 days would be a material liquidity risk. The sector context: NEA's take-or-pay IPP obligations are growing faster than its own revenues.

Single-river hydrology risk. The FY2081/82 flood/landslide loss of NPR 36.3 million and the associated NPR 38.1 million insurance claim confirm real, recurring physical risk to a single-river asset. A multi-year drought, GLOF event, or sediment accumulation could materially impair generation.

Analytical Perspectives

The case for the operating business. Solu Khola is a genuine cash-backed annuity: OCF exceeded PAT in every operating year; the take-or-pay PPA with a sovereign-backstopped offtaker is the most credit-like structure in the listed equity universe; the vintage-cheap tariff positions the plant as the last-curtailed in a wet-season glut; and deleveraging is real, ahead of plan, and mechanically driving earnings growth. FY2082/83 is tracking approximately NPR 33 EPS on an annualized basis (Estimate) — materially above the prior year. (Source: SAHAS verified financial file — Primary; portal data — Secondary.)

The analytical tension. At NPR 662, a sum-of-the-parts analysis yields: Solu Khola finite-life DCF base approximately NPR 13 billion (NPR 284/share) + risk/time-adjusted Budhi Gandaki approximately NPR 4.5 billion (NPR 98/share) = base SOTP approximately NPR 389/share (Estimate — inputs stated below). The current price of NPR 662 is approximately 70% above the base SOTP. The reverse-valuation reveals that approximately NPR 17.3 billion (57% of market cap) is the market's implicit valuation of Sahas's Budhi Gandaki stake today, implying the stake would need to be worth approximately NPR 35 billion at construction completion (approximately 2031) to clear a 15% hurdle — a near-flawless-execution scenario for a project selling 70% of its energy at the ordinary wet-season rate. (Estimate — see Valuation Context below.)

Valuation Context

Reference price NPR 662 (24 July 2026 — Secondary; 52-week range NPR 535.3–716.6). Market cap approximately NPR 30,290 million on 45,738,000 shares. All estimates and derived figures labeled accordingly. Not investment recommendations.

Solu Khola — Finite-Life DCF (primary method)

Estimate. Inputs: generation approximately 466 GWh flat; tariff escalates to approximately FY2028 then flat nominal (approximately NPR 5.9/kWh); M&LT debt fully amortized approximately FY2035; income tax 0% to 2033, 50% rebate to 2038, then approximately 20%; O&M inflating approximately 5%/year; maintenance capex approximately NPR 100 million; NO terminal value (licence approximately 2050). COE 13.5% (Nepal 10-year bond approximately 7% + frontier ERP 5% + single-asset/counterparty/governance premium 1.5%). Invalidated if: tariff regime upgraded; licence renewed with economic value; COE structurally below 12%.

Bear (COE 14.5%): approximately NPR 10,000 million (NPR 219/share). Bull (COE 12.5%): approximately NPR 15,000 million (NPR 328/share). Cross-check: EV/MW benchmark (NPR 200–280 million/MW for operating Nepali RoR IPPs, Secondary) → EV NPR 17.2–24.1 billion; less net debt approximately NPR 10.5 billion → equity NPR 6.7–13.6 billion (NPR 147–297/share). Brackets the DCF.

Budhi Gandaki — Risk- and Time-Adjusted SOTP Leg

Estimate — highly uncertain. NOT in audited accounts. Inputs: gross revenue approximately NPR 11.7 billion/year (Derived: 1,304 GWh × 4.80 + 320 GWh × 10.55 + 244 GWh × 8.40 = NPR 11,683 million); project cost NPR 70 billion; debt NPR 52.5 billion / equity NPR 17.5 billion; Sahas ultimate stake approximately 51%; steady-state project equity value at COD (approximately 2031) approximately NPR 25 billion (100%) → approximately NPR 12.8 billion at 51%; discounted 5–6 years at 15% (COE + execution premium) → approximately NPR 6.4 billion; execution/cost-overrun haircut 0.7 → base approximately NPR 4.5 billion (NPR 98/share). Bear: approximately NPR 2.5 billion (NPR 55/share — material slip or cost overrun). Bull: approximately NPR 10–12 billion (NPR 219–262/share — on-time, on-budget, tariff upgrade). Invalidated by: Budhi Gandaki construction milestones; cost outcome vs NPR 70 billion budget; Sahas's ultimate look-through stake after planned sell-down.

Sum-of-the-Parts Summary

(All Estimates — inputs stated; invalidation conditions stated; not investment recommendations.)

Reverse-valuation at NPR 662. Market cap NPR 30.3 billion. Crediting Solu Khola at base DCF (NPR 13 billion), the residual market value assigned to Budhi Gandaki is approximately NPR 17.3 billion. For this to clear a 15% hurdle, Budhi Gandaki's equity to Sahas must be worth approximately NPR 35 billion at COD (approximately 2031) — implying approximately 3.5–3.9× equity multiple on NPR 17.5 billion invested, from a plant selling 70% of its energy at NPR 4.80/kWh. (Derived from market cap and base DCF; inputs stated.)

Trailing multiples at NPR 662: P/B approximately 3.75× (portal-sourced NAVPS NPR 176.74, Secondary). Normalized-tax trailing P/E approximately 43× on post-holiday normalized PAT of approximately NPR 716 million per year (Derived). Reporting-basis P/E approximately 19× (portal-reported — Secondary).

What We Are Watching

1. Budhi Gandaki construction milestones (FY2082/83–FY2083/84). EPC award, site mobilization, and first civil-works milestones are the primary confirming or falsifying data. Any slip of more than nine months or announced cost escalation above the NPR 70 billion budget meaningfully impairs the NPR 4.5 billion base valuation of this leg.

2. NEA receivable days (FY2082/83 annual report, expected August–October 2026). Trend from approximately 48 days (FY2080/81) to approximately 57 days (FY2081/82). Threshold to watch: above 90 days would indicate material payment stretch and potential liquidity risk for a zero-cash-balance company with bridge-loan refinancing exposure.

3. Times Energy ownership structure. The Share Purchase Agreement (95% agreed → 56.67% held → 51% target) signals a planned sell-down. The terms, timing, and dilution to Sahas's look-through economics will determine whether Budhi Gandaki's value accrues proportionally to Sahas shareholders.

References

1. Sahas Urja Limited — Audited Annual Reports FY2077/78–FY2081/82 (five years). Auditor: I. Dhakal (FY2081/82, unqualified); R. Sapkota (prior); Wagle (earliest). Accessible via SEBON filings. Primary, company self-reported.

2. ShareHub Nepal — SAHAS market data: price NPR 662 (24 Jul 2026), NPR 666.5 (20 Jul 2026), 52-week range 535.3–716.6, annualized EPS 34.48, P/B 3.75. Accessed 2026-07-25. sharehubnepal.com Secondary.

3. Kathmandu Post / NEA public announcements — Budhi Gandaki financial close (NPR 52.5 billion, 10 banks, August 2025); PPA tariffs (NPR 10.55 peak-dry / 8.40 dry / 4.80 wet); EPC contractors (China Energy Engineering Group and Everest Power). Secondary.

4. Income Tax Act 2058, §11(3d) — hydropower tax exemption regime. Accessible via Nepal Law Commission. Primary.

5. Nepal Hydro Industry Report — +16 Capital research (sector context: NEA counterparty risk, EV/MW benchmarks NPR 200–280 million/MW, wet-season export development, IPP curtailment dynamics). Internal research citing industry data. Secondary.

6. NRB / CEIC data — Nepal government bond yield approximately 7% (10-year estimate). Secondary.