Executive Summary
Sahas Urja owns 100% of the 86 MW Solu Khola (Dudh Koshi) run-of-river hydropower project in Solukhumbu (commercial operation since March 2023) and 56.67% of Times Energy Pvt. Ltd., the project company building the 341 MW Budhi Gandaki PROR (semi-reservoir) in Gorkha — gross head 398 m, net head 385.3 m, installed capacity 341 MW per the SAHAS AR FY 2081/82, project profile (line 813–837 in the extracted AR text). Total Budhi Gandaki project cost is approximately Rs. 70 billion; financial close was achieved in August 2025 with Rs. 52.5 billion in bank debt.
Solu Khola sells electricity to NEA under a 30-year take-or-pay PPA at the standard two-tier seasonal tariff (Rs. 4.80/kWh wet, Rs. 8.40/kWh dry, with 3% × 5-year escalation). In FY 2081/82, the company generated 46.66 GWh of contracted energy, with revenue of Rs. 2,648M (+8.2% YoY) and PAT of Rs. 895M (+113% YoY) on debt-amortisation-driven margin expansion. Equity capital is Rs. 4,573.8M (post-bonus share issuance in FY 2081/82), implying a paid-up share count of 45.74M.
Financial Scorecard (5-Year, NPR Million)
Source: SAHAS Annual Reports FY 2077/78–FY 2081/82.
| Metric | FY 77/78 (pre-COD) | FY 78/79 (pre-COD) | FY 79/80 (partial year, COD March 2023) | FY 80/81 (first full op year) | FY 81/82 |
|---|---|---|---|---|---|
| Revenue | n/a (construction) | n/a | 610.7 (4.5 months) | 2,447.5 | 2,648.2 |
| Direct expenses | n/a | n/a | (45.4) | (164.3) | (188.2) |
| Project asset amortisation | n/a | n/a | (224.6) | (602.3) | (810.0) |
| Gross profit | n/a | n/a | 340.7 | 1,680.8 | 1,849.9 |
| Admin expenses | n/a | n/a | (42.7) | (71.9) | (78.3) |
| Depreciation | — | — | (5.9) | (13.7) | (14.9) |
| Operating profit | n/a | n/a | 583.5 | 1,596.6 | 1,721.1 |
| Net finance cost | n/a | n/a | (476.3) | (1,164.7) | (798.3) |
| Profit before tax | n/a | n/a | 107.2 | 420.4 | 895.1 |
| Profit after tax (PAT) | small | small | 107.2 | 420.4 | 895.1 |
| Equity (capital + reserves) | ~5,538 | ~5,538 | ~5,645 | ~6,066 | 6,942 |
| Long-term debt | growing | growing | 9,883 | 9,615 | 9,177 |
| Bridge / short-term loan | growing | growing | 807 | 1,305 | 1,491 |
| Total debt / equity | n/a | n/a | ~1.9× | ~1.8× | ~1.54× |
| Total Assets | ~14,000 | ~16,000 | ~17,108 | 17,091 | 17,728 |
| Cash & equivalents | — | — | 151.2 | 75.2 | 208.1 |
| EPS (Rs.) | — | — | ~3.06 (annualised partial) | 12.01 | 23.68 |
| Bonus shares declared | — | — | none | 8% | 21% |
| Cash dividend | — | — | none | 8% | 1.1053% |
H1 FY 2082/83 Update
Source: SAHAS Quarterly Financial Statements Q1 and Q2 FY 2082/83 (unaudited).
| Metric (Rs.) | Q1 FY 82/83 | Q2 FY 82/83 | H1 Total |
|---|---|---|---|
| Revenue | 924,636,987 | 780,281,332 | 1,704,918,319 |
| Cost of sales | 63,937,217 | 43,789,744 | 107,726,961 |
| Gross profit | 860,699,770 | 736,491,588 | 1,597,191,358 |
| Operating profit | 677,478,849 | 568,090,536 | 1,245,569,385 |
| Finance cost | 167,964,432 | 146,404,894 | 314,369,326 |
| Profit before tax | 500,002,043 | 414,154,445 | 914,156,488 |
| Profit after tax | 494,899,981 | 409,928,380 | 904,828,361 |
H1 FY 2082/83 PAT (Rs. 904.8M) is already at 101% of full-year FY 2081/82 PAT (Rs. 895.1M), driven by lower finance cost as project debt amortises (annualised H1 finance cost ~Rs. 629M vs. FY 2081/82 full-year Rs. 798M). The 21% bonus share issuance from FY 2081/82 was executed between Q1 and Q2, expanding paid-up capital from Rs. 3,780M to Rs. 4,573.8M.
Investment in subsidiaries (Times Energy / Budhi Gandaki) rose from Rs. 1,339.7M at Q1 to Rs. 2,161.7M at Q2 — Rs. 822M of incremental equity deployment, consistent with the start of major civil works on Budhi Gandaki.
The Bull Case
1. Solu Khola enters its highest-cash-flow years. With long-term debt of Rs. 9,177M at FY 2081/82 close (down from Rs. 9,615M YoY) and ~Rs. 252M of scheduled principal repayment in FY 2081/82, finance costs continue to roll off through the late 2020s.
2. Budhi Gandaki executes within tolerance. This is the central variable. If Times Energy commissions 341 MW within roughly 5 years and within ~25% of Rs. 70B budget, SAHAS effectively doubles its operating capacity at the storage/peaking tariff regime. Storage projects benefit from the higher dry-season tariff band in NEA's PPA framework, materially above the standard RoR rates.
3. Storage tariff regime persists. ERC Nepal's storage tariff framework provides a meaningful premium over RoR. Direction of cross-border export demand from India and Bangladesh affects the durability of this premium.
4. NRB easing cycle. A continuing decline in commercial bank lending rates lowers refinancing cost on existing debt and lowers DPR-baseline cost-of-debt for Budhi Gandaki construction.
5. Bonus + cash dividend hybrid policy. FY 2081/82 declared 21% bonus + 1.1053% cash. Continuation of this hybrid expands paid-up capital while distributing modest cash; minority shareholders accumulate share count through the construction phase.
The Bear Case
1. Budhi Gandaki cost or schedule overrun
Nepali hydropower has a history of large projects running 50–100% over budget and 3–5 years late. Budhi Gandaki at 341 MW is among the largest IPP-led projects ever attempted in Nepal. Rs. 70B is roughly 4× the company's current total assets. A 50% construction overrun would require Rs. 35B of additional capital — equity dilution to plug a gap of that magnitude could materially impair current shareholders. Signal to watch: quarterly construction milestones against DPR; any slippage of more than 9 months in the first 24 months of construction warrants reassessment.
2. Real-tariff erosion plus operating-cost step-up
The 3% × 5-year escalation cap means real tariffs decline over time. If royalty rates rise (currently 1.85% capacity + 10% revenue, with potential government increases under discussion), if O&M costs accelerate, or if a major repair event hits in years 8–15, project profitability compresses. FY 2081/82 admin expenses of Rs. 78.3M were ~10% above FY 2080/81.
3. NEA receivables trajectory
Sahas's "Sundry Debtors — Receivable from NEA" rose from Rs. 323M (FY 2080/81) to Rs. 412M (FY 2081/82) — a 27% increase against revenue growth of 8.2%. Receivables aging in days extended from ~48 to ~57. This is a sector-level pressure that requires monitoring (see also the NEA report on this site for sector context).
4. Single-river concentration
Substantially all operating revenue is from one river system. A multi-year drought, sediment event, or major structure failure on the Solu Khola asset would materially impact cash flow. FY 2081/82 included Rs. 36.26M of "flood and landslide" loss — small in absolute terms but signals ongoing physical risk.
5. Times Energy minority dynamics
SAHAS owns 56.67% of Times Energy; the remaining 43.33% is held by other shareholders. Future capital calls or governance disputes at Times Energy could complicate decision-making.
Moat Assessment
Verdict: Narrow.
- Regulatory licences. Generation licence + 30-year PPA + transmission interconnection rights for Solu Khola, plus the Budhi Gandaki licence held by Times Energy, are scarce, non-transferable assets.
- Project execution capability. Solu Khola was completed approximately 9 months late and ~19% over budget — both better than the listed-hydro average. This is institutional capability that newcomers lack.
- Lender relationships. The 11-bank consortium for Solu Khola and the lender consortium for Budhi Gandaki represent multi-year relationships of demonstrated trust.
The PPA itself, the river concession, the technology (commodity Pelton turbines), and brand recognition are not durable moats.
Management
Source: SAHAS Annual Report FY 2081/82, Note 29.4 (Transactions with and payments to directors, p.57).
| Item | Detail |
|---|---|
| Chairman | Him Prasad Pathak (1.36% direct holding) |
| Managing Director | Sushil Thapa (1.40% direct holding) |
| Chairman total compensation FY 2081/82 | Rs. 72,28,304 = facilities Rs. 56,95,200 + meeting allowances Rs. 1,28,000 + staff bonus from FY 2080/81 Rs. 14,05,104 |
| MD total compensation FY 2081/82 | Rs. 45,45,690 = facilities Rs. 35,59,500 + meeting allowances Rs. 1,08,000 + staff bonus from FY 2080/81 Rs. 8,78,190 |
| Combined Chairman + MD | Rs. 1,17,73,994 (~1.3% of FY 2081/82 PAT) |
| Independent directors | 1 (Bibhuti Ojha) on a 7-member board — at the regulatory minimum |
| Director changes at FY 2080/81 AGM (Nov 2024) | Three new directors appointed: Ang Gelu Sherpa, Garima Adhikari, Bibhuti Ojha; replacing Min Raj Kadel, Paritosh Paudyal, Bhoj Bahadur Shah |
| Auditor | I. Dhakal & Associates, Chartered Accountants — clean unqualified opinion |
| Inter-company advance to Budhi Gandaki | Rs. 134.9M classified as "Other Current Assets — Advance for Budhi Gandaki Project" (notes state this will be adjusted against subsidiary's equity or recovered upon project completion / refinancing). Worth quarterly tracking. |
For context, SHPC's GM total compensation for FY 2081/82 was Rs. 51,52,000 (SHPC AR FY 2081/82, Note 4.27). SAHAS's Chairman + MD combined of Rs. 1.18 crore is at the higher end of the listed single-asset-IPP range; this is normal during a construction-phase company managing both an operating asset and a large subsidiary project.
Quality of Earnings
- PAT vs operating cash flow. FY 2081/82 PAT Rs. 895M; operating cash flow Rs. 1,242M. The Rs. 347M positive gap is mostly amortisation (Rs. 810M non-cash) offset by a working-capital build (receivables +Rs. 89M; other current assets +Rs. 327M). Cash backing of earnings is solid.
- Receivables growth trajectory. Receivables from NEA growing 27% YoY against 8.2% revenue growth is the early indicator of sector-level payment pressure.
- Interest coverage ratio. FY 2081/82: operating profit Rs. 1,721M / finance cost Rs. 802M = 2.14×. H1 FY 2082/83 annualised: ~Rs. 2,491M / ~Rs. 629M = ~3.96×. Materially improving as debt amortises.
- Debt service coverage. H1 FY 2082/83 annualised EBITDA ~Rs. 3,100M against estimated full-year debt service ~Rs. 880M (interest ~Rs. 629M + principal ~Rs. 250M) = DSCR ~3.5×.
Macro Context
| Variable | Current state | Direction |
|---|---|---|
| NRB policy rate | 4.25% (cut from 5.50% in 2025) | Easing |
| Commercial bank lending rate | ~9.0–9.5% | Falling slowly |
| NPR/INR peg | 1.60 | Stable |
| NEA counterparty health | Receivables across IPPs growing | Slowly worsening |
| India export demand | Approved export quantum 936.72 MW (NEA AR FY 2081/82); rapidly growing from prior years | Improving |
| Storage tariff premium | Standard NEA framework provides meaningful premium for storage / peaking RoR | Maintained |
| Listed-hydro IPO pipeline | Multiple new listings in pipeline | Rising sector dispersion |
Valuation
Earnings multiple
- Trailing FY 2081/82. PAT Rs. 895M; trailing EPS ~Rs. 23.7 on 37.8M pre-bonus shares; trailing P/E at Rs. 615 ≈ 26×.
- Forward FY 2082/83. H1 PAT Rs. 905M; if H2 delivers Rs. 400–450M (dry-season seasonality), full-year FY 2082/83 PAT tracks Rs. 1,300–1,350M. On post-bonus paid-up of 45.74M shares, forward EPS Rs. 28–30. Forward P/E at Rs. 615 ≈ 20–22×.
Book value and ROE
- Book value at Q2 FY 2082/83: equity capital Rs. 4,574M + retained earnings Rs. 3,229M + other equity Rs. 5.4M = Rs. 7,808M → BV per share Rs. 170.7.
- P/B at Rs. 615 = 3.60×.
- Forward FY 2082/83 ROE (PAT ~Rs. 1,325M / average equity ~Rs. 7,375M) ≈ 18%.
Sum-of-the-parts (illustrative)
- Solu Khola alone (86 MW): industry capitalised cost benchmark of Rs. 250–280M per MW for a deleveraging operating asset → Rs. 21.5–24.1B equity value → Rs. 570–640 per share.
- Budhi Gandaki stake (341 MW × 56.67% × Rs. 280M per MW): Rs. 27B at full value, before construction-risk discount. At a 50% probability-weight, ~Rs. 13.5B → ~Rs. 357 per share. At a 25% probability-weight, ~Rs. 178 per share.
- Combined SOTP fair-value range depends heavily on the construction-risk discount applied to Budhi Gandaki.
Indicative fair-value range
- Conservative (Solu Khola only, no Budhi Gandaki credit): Rs. 550–630.
- Base (Solu Khola + Budhi Gandaki at 25% probability-weight): Rs. 660–760.
- Higher (Solu Khola + Budhi Gandaki at 50% probability-weight + storage tariff hold): Rs. 830–980.
Key Variables to Monitor
- Budhi Gandaki construction milestones over the next 24 months — on-time start of major civil works; quarterly progress vs. DPR; trajectory of the "Advance for Budhi Gandaki Project" line item.
- NEA receivables aging — currently Rs. 412M / ~57 days. Above 75 days would indicate broader sector payment-cycle stress.
- H2 FY 2082/83 print — confirms whether forward EPS Rs. 28–30 is the run-rate.
- Times Energy capital structure — quarterly disclosures of equity calls; any related-party debt-to-equity conversions.
- Storage tariff regime stability — durability of the premium over RoR rates.
Sources
- SAHAS Annual Reports FY 2077/78–FY 2081/82 (audited by I. Dhakal & Associates, Chartered Accountants). Key citations from AR FY 2081/82: Note 29.4 (Transactions with and payments to directors); financial statements; project profile (Budhi Gandaki gross head 398 m, net head 385.3 m, installed capacity 341 MW).
- SAHAS Quarterly Financial Statements Q1 and Q2 FY 2082/83 (unaudited).
- NEA Annual Report FY 2081/82 — offtaker context, cross-border trade.
- Electricity Regulatory Commission Nepal — PPA tariff framework; storage tariff regime.
- NEPSE Market Data — share price reference.
- ICRA Nepal credit rating report on Sahas Urja Limited (January 27, 2025).
Research date: May 10, 2026.