Bhujung Hydropower Limited IPO: Fundamental Analysis for Local and Foreign Employment Investors

Hydropower IPOs have always attracted strong interest in the Nepalese share market. Among them, Bhujung Hydropower Limited has recently issued its IPO for local residents and Nepalese working in foreign employment. Naturally, many investors are asking one simple question: Is this IPO worth applying for or not?

In this article, we will discuss the fundamental aspects, risks, and investment potential of Bhujung Hydropower Limited in a clear, practical, and human-written style.

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Company Overview

Bhujung Hydropower Limited is a Nepalese hydropower company developing a run-of-river (RoR) hydropower project located in Lamjung District. The project has an installed capacity of approximately 7.5 MW.

As a run-of-river project, it generates electricity using the natural flow of the river without constructing a large storage dam. This makes the project relatively environment-friendly compared to reservoir-based projects.

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Revenue Model and Business Stability

The primary source of revenue for Bhujung Hydropower Limited is the sale of electricity to the Nepal Electricity Authority (NEA) under a long-term Power Purchase Agreement (PPA).

• Fixed electricity selling rate ensures predictable income
• Lower exposure to market price fluctuations
• Relatively stable long-term cash flow

However, due to the run-of-river nature of the project, electricity generation is higher during the monsoon season and lower during the dry winter months.

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Financial Strength and Credit Profile

Like most hydropower projects in Nepal, Bhujung Hydropower Limited has been developed mainly through bank loans. As a result, interest expenses remain higher during the initial operational years.

The company has received a B- credit rating from ICRA Nepal, indicating a relatively higher level of credit risk. This does not necessarily mean the company is weak, but it suggests that investors should adopt a long-term investment perspective.

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IPO Structure and Demand Perspective

Bhujung Hydropower Limited has issued its IPO at a face value of NPR 100 per share. A portion of the shares is reserved for:

• Project-affected local residents
• Nepalese citizens working in foreign employment

Historically, IPOs with local and foreign employment quotas tend to receive strong demand. Many hydropower stocks have shown positive movement after listing, although this is not guaranteed.

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Key Strengths

• Operates in the renewable energy sector
• Power Purchase Agreement with NEA ensures revenue security
• High IPO demand due to reserved quotas
• Long-term income visibility after loan repayment

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Risks and Weaknesses

• Small project size limits profit scalability
• High debt burden in early years
• Seasonal fluctuation in power generation
• Low credit rating (B-)
• Hydropower stocks can be volatile in the secondary market

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Who Should Consider Applying?

This IPO may be suitable for:

• First-time IPO applicants
• Local residents and foreign employment investors
• Investors with a long-term holding strategy

Short-term traders should wait and analyze market behavior after listing before making any decisions.

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Final Verdict

Bhujung Hydropower Limited is fundamentally average but sector-wise strong. The IPO appears reasonable to apply for, especially for local and foreign employment investors. However, it should be approached with realistic expectations and a long-term mindset.

As always, investors should evaluate their own financial capacity and risk tolerance before applying.