After skyrocketing by 190% in 2023, the company’s shares have reached an unprecedented peak. What’s behind this powerful rally? Delve into the driving forces stirring this surge.
India’s Listed PSUs Rise from the Ashes in 2023
The year 2023 witnessed a remarkable resurgence for India’s listed Public Sector Undertakings (PSUs), buoyed by substantial government investment in infrastructure and domestic manufacturing. This surge translated into a staggering Rs 2 trillion (tn) increase in market capitalization for these companies. Notably, one in three PSU stocks on the index experienced over 100% returns, signaling a dramatic turnaround from their previous struggles. The standout performer of 2023 was the Nifty PSE index, which skyrocketed by an impressive 81%.
The Outlier: SJVN’s Spectacular Ascent
Amid this electrifying rally, one PSU stock has particularly captured attention – SJVN. This powerhouse in the energy sector has already surged over 10% in 2024, reaching unprecedented heights.
Fuelling the Surge: Formation of Four Joint Venture Companies
SJVN has secured approval from crucial authorities for its ambitious proposal to establish four Joint Venture (JV) companies in India and Nepal. These ventures will focus on developing hydro and renewable projects, marking a significant strategic move for the company.
Strategic Partnerships and Project Expansion
In these JV companies, SJVN will take the lead in three ventures, with its wholly-owned subsidiary, SJVN Green Energy Ltd., leading the fourth. Among these partnerships, the collaboration with Maharashtra State Power Generation Company Ltd. stands out for its focus on developing renewable energy projects with a capacity of 5,000 MW.
Additionally, SJVN is set to engage in a joint venture with the government of Arunachal Pradesh and Navyuga Engineering Company to spearhead the development of the 1,878 MW Oju Hydro Electric Project. This initiative reinforces SJVN’s commitment to expanding its presence in the hydroelectric sector.
Furthermore, the company’s collaboration with the Nepal Electricity Authority and GMR Energy for the implementation of the 900 MW Upper Karnali Hydro Electric project presents a significant opportunity for cross-border partnerships and expansion into Nepal’s energy landscape.
Notably, SJVN Green Energy Ltd. is poised to establish a joint venture with the Assam Power Development Company, focusing on the development of 1,000 MW renewable energy projects in Assam.
Catalyst for Stock Rally
By consolidating its diverse portfolio, which encompasses hydro, solar, wind, and thermal power businesses, SJVN’s project capacity currently stands at an impressive 56,000 MW, spanning across India and Nepal. This expansive vision, combined with its strategic joint ventures, has undeniably fueled the remarkable rally in the company’s stock.
SJVN’s Milestone: Gurhah Solar Power Project
On January 1, 2023, SJVN’s subsidiary, SJVN Green Energy, achieved a significant milestone with the commissioning of the Gurhah solar power project in Jalaun, Uttar Pradesh. This renewable energy initiative boasts a capacity of 75 megawatts and marks a strategic leap in the company’s green energy portfolio.
Project Details
The project was secured at an impressive rate of Rs 2.9 per unit, underlining SJVN’s commitment to cost-effective and sustainable power generation. A pivotal development in this endeavor is the finalization of a 25-year power purchase agreement with the Uttar Pradesh Power Corporation (UPPCL), ensuring a stable revenue stream for the foreseeable future.
Financial and Operational Impact
With a construction cost of Rs 408.42 crore, the Gurhah solar power project is poised to yield substantial returns. In its inaugural year, the project is expected to generate 159.7 million units of energy, with an estimated cumulative output of 3,716 million units over the next 25 years. This translates to an annual revenue of approximately Rs 480 million, further enhancing SJVN’s financial outlook.
Boosting Installed Capacity
The successful commissioning of the Gurhah Solar Power Project has propelled SJVN’s total installed capacity to 2227 MW, consolidating its position as a major player in the renewable energy landscape.
Impact on SJVN’s Performance
This significant achievement has undoubtedly contributed to the positive momentum of SJVN’s overall performance, reflecting the company’s unwavering commitment to sustainability and growth in the renewable energy sector.
SJVN’s Financial Endeavors
In a groundbreaking development, SJVN, a key player in the power sector, has successfully secured a significant construction finance facility to propel its upcoming renewable energy projects. This milestone transaction, worth Rs 100 billion, stands as a pioneering feat for a PSU entity, marking a significant shift in the financial landscape.
Unprecedented Collaboration
The arrangement of this construction finance facility was spearheaded by SJVN Green Energy Limited (SGEL), a wholly-owned subsidiary of SJVN Ltd, in partnership with SBI Capital Markets Ltd (SBI CAPS). Notably, SBI CAPS orchestrated the entire transaction, drawing enthusiastic participation from both domestic and international lenders, ensuring its oversubscription.
Lenders and Revolving Nature
Following meticulous evaluations, SJVN chose to proceed with five prominent banks, namely Deutsche Bank, State Bank of India, Punjab National Bank, Bank of India, and MUFG Bank, underlining the robust backing of esteemed financial institutions. Furthermore, the credit facility’s revolving nature signifies SJVN’s ability to continuously draw funds commensurate with the dynamic construction requirements of its ongoing projects.
Impetus for Renewable Energy Development
This construction finance facility assumes paramount importance in bolstering SJVN’s capacity to expedite the progress of its renewable energy initiatives, thereby contributing significantly to the government’s ambitious target of achieving 500 GW of renewable energy by 2030. Consequently, it will be channeled strategically to drive the establishment of cutting-edge solar and wind energy projects across various regions in India.
Milestone Disclosure
Unveiling the details of this landmark transaction, a noteworthy event was organized by SBICAPS, shedding light on this transformative collaboration between a PSU entity and public sector banks. This disclosure underscores the significance and trailblazing nature of the financial initiative undertaken by SJVN.
This financial maneuver not only fortifies SJVN’s position in the renewable energy landscape but also sets precedent for future financial undertakings within the realm of PSU entities, charting a new course in the financial arena.
Energizing Growth: SJVN’s Rs 100 Billion Financing Triumph
SJVN, a significant player in the energy sector, has achieved a remarkable feat by securing a substantial Rs 100 billion construction finance facility for its upcoming renewable energy projects.
Breaking new ground, this pioneering transaction involving esteemed domestic and international lenders was effectively orchestrated by SJVN Green Energy Limited (SGEL) in conjunction with SBI Capital Markets Ltd (SBI CAPS).
The resoundingly oversubscribed credit facility, featuring participation from Deutsche Bank, State Bank of India, Punjab National Bank, Bank of India, and MUFG Bank, operates on a revolving basis, empowering SJVN to access funds as necessitated for its project construction endeavors.
This strategic milestone is poised to expedite the development of SJVN’s renewable energy projects, significantly contributing to the government’s ambitious target of achieving 500 GW of renewable energy by 2030.
The allocated funds will notably fuel the advancement of cutting-edge solar and wind energy ventures across India.
The unveiling of this noteworthy initiative took place at an event meticulously orchestrated by SBICAPS, underscoring the company’s unwavering dedication to sustainable growth and innovation within the renewable energy domain.
Stepping into the Future: SJVN’s Ambitious Expansion Plans
Undeterred by challenges, SJVN continues to march resolutely towards the realization of its target to reach 12,000 MW by 2026.
This unwavering commitment is further compounded by the divulgence of its aspirational vision to achieve 25,000 MW by 2030 and a monumental 50,000 MW installed capacity by 2040. Spearheading this expansion frenzy, SJVN is resolutely targeting an addition of 10,000 MW of renewable energy capacity over the forthcoming three years.
Notably, the company is simultaneously steering 16 projects with a collective capacity of 4,500 MW towards completion, unveiling an ambitious portfolio envisaging a massive 55,000 MW capacity.
The company’s management has meticulously outlined plans for the commissioning of 54 projects within the subsequent three years, with a strategic distribution of 10 projects in the first year, 19 projects in the second year, and a notable 25 projects in the third year.
Underscoring its strategic foresight, SJVN is poised to leverage the government’s steadfast aspiration to fulfill 50% of its energy requisites through clean energy sources by the end of the decade, positioning public-sector ventures like SJVN favorably.
Emboldening Investor Sentiment: SJVN’s Stock Performance Signals Upward Trajectory
The meteoric surge of SJVN’s stock price by approximately 199% over the last year underscores a robust affirmation of investor confidence.
In the shorter trajectory of a month, the company’s shares have deftly galloped, registering a commendable gain of 8.3%.
Reflecting the buoyancy of its performance, SJVN’s share price peaked at a notable 52-week high of Rs 104.9 on 17 January 2024, juxtaposed with its 52-week low of Rs 30.4 achieved on 27 March 2023.
Presently, the company’s shares are trading at a PB (price to book value) multiple of 2.8 times, further strengthening investor sentiments and reflecting the robust undercurrent of confidence in the company’s potential for sustained growth.
About SJVN
SJVN, formerly known as Satluj Jal Vidyut Nigam, is a prominent Indian public sector undertaking primarily engaged in hydroelectric power generation and transmission. Established in 1988 as Nathpa Jhakri Power Corporation, it was a joint venture between the Government of India and the Government of Himachal Pradesh.
The company currently boasts a total operating hydropower capacity of 1,912 MW, which is achieved through its two major hydropower plants – Nathpa Jhakri and Rampur. Additionally, SJVN has made strides in diversifying its energy portfolio, with an installed capacity of 97.6 MW of wind power and 81.9 MW of solar power.
SJVN’s footprint extends to various regions across India, including Himachal Pradesh, Uttarakhand, Bihar, Maharashtra, Uttar Pradesh, Punjab, Gujarat, Arunachal Pradesh, Rajasthan, Assam, Odisha, Mizoram, and Madhya Pradesh. Furthermore, the company has expanded its operations beyond India, with ongoing hydroelectric projects in Nepal and Bhutan.
SJVN Secures Rs 100 Billion Financing for Renewable Energy Projects
SJVN, a major player in the energy sector, has made a significant stride by securing a groundbreaking Rs 100 billion construction finance facility for its upcoming renewable energy projects. This unprecedented transaction, facilitated by SJVN Green Energy Limited (SGEL) in collaboration with SBI Capital Markets Ltd (SBI CAPS), involves leading domestic and international lenders.
The over-subscribed credit facility, which includes participation from Deutsche Bank, State Bank of India, Punjab National Bank, Bank of India, and MUFG Bank, operates on a revolving basis. This structure empowers SJVN to access funds as needed for the construction of its renewable energy projects, showcasing a strategic approach to project financing.
By leveraging this financial backing, SJVN aims to expedite the development of advanced solar and wind energy projects, aligning with the government’s ambitious target of achieving 500 GW of renewable energy capacity by 2030. The deployment of this substantial facility underscores the company’s dedication to driving progress in the renewable energy sector.
Conclusion
This accomplishment reinforces SJVN’s position as a trailblazer in the energy industry, bolstering investor confidence and marking a pivotal moment in its journey towards sustainable growth and innovation. The successful procurement of this financing facility serves as a testament to SJVN’s commitment to advancing renewable energy initiatives and contributing to India’s sustainable development goals.
