[This EPS of 32.4 (8.12*4) doesn’t take into consideration that the company needs to start paying principal and interest after the start of production.](https://preview.redd.it/tc5bsdmzea281.png?width=444&format=png&auto=webp&s=8518492853917844e5970d7b29751e5d5bdac014)

Let’s look at why this EPS is so misleading:

Project **expenses**

Due to significant multi-year delay in its commercial operation date, its total liabilities excluding equity has reached a massive NPR 79.5 billion due to the capitalised interest according to its 1st quarter report.

[79.5 billion in debt.](https://preview.redd.it/gw5hidxwfa281.png?width=553&format=png&auto=webp&s=f39188849348c2fe936676589aa33a7b01be43aa)

​

At a 10% interest rate, it’s annual loan P&I repayments will be Rs 7,950,026,557. On its 1st quarter statement, it showed finance cost of just 506,417,230.04*4= 2,025,668,920.16.

The other recurring expense for the company is the operating expenses which using the quarterly report and multiplying by 4 gives us 348.74 million annually.

**Revenue from power sales**

Upper’s estimated annual Income from electricity sales will be between Rs 6,950,606,175 – 9,267,474,900 based on its output.

It will have an expected annual revenue of NPR 6.95 Billion at 75% output, if so the company is expected to lose NPR 1.35 billion annually. *This equates to an earnings per share of* ***– NPR 12.82 (negative)***

However, if it can operate at 100% efficiency, the company will have a profit of NPR 958.73 million that can be used to pay a return to its investors. *This equates to an earnings per share of* ***NPR 9.05.***

The EPS will be probably be somewhere between -12.82 and 9.05. So definitely not

Lenders will get their money back with interest, however, investors may not see the returns that they had hoped or any returns at all.

Note that: UPPER will also receive around 2.28 billion as a one-time capital subsidy (5 million per MW). This equates to a one time EPS of around 20.

**So why the price rise you may ask?**

UPPER is planning to [build a diversion of the Rolwaling River to the UTKHEP intake pond](http://utkhpl.org.np/future-extension/) that will generate an additional 167 GWh of energy annually. The total annual energy production will be 2448 GWh with increased discharge. Optimistically, this will add about 15% flow in the dry season. 

This is pure speculation but UPPER may decide to issue rights shares to fund this.

Link to the full article: [https://savingsnepal.com/upper-tamakoshi-share-price-value/](https://savingsnepal.com/upper-tamakoshi-share-price-value/)

What am I missing here? Any thoughts?

Im happy to hear everyone’s thoughts on this.

More at: r/NepalStock by 1v9nwinning

8 comments
  1. Lenders will get their money back with interest, however, investors may not see the returns that they had hoped or any returns at all. <– lol Good Joke. .. Local holders have 509% returns as of now.. and they havent even sell it. Mainly A grade local Holders.. many a grade local holders even dont have broker account got only demat. .. I am on that 15% too.. My target is at least 1000% returns from it. See you in 1k -1500 now or in future

  2. Wow!! great research OP. hoping to see these type of detailed research on this subreddit on regular basis.(not just from you obv).

  3. 2 units out of 6 only sold for 45 days approx. it came commercially onlni from around september . Upper’s performance during dry season will be better asit has some pond like feature where it can store atleast in the night .

  4. Thank you for this OP. Love the research! Also, another red flag is that UPPER does not have enough liquidity to meet its short term needs. Its current liabilities exceeds current assets by 2B. It received Rs 2B as short-term loan from NEA this Q1.

    >Note that: UPPER will also receive around 2.28 billion as a one-time capital subsidy (5 million per MW). This equates to a one time EPS of around 20.

    We can kiss this grant goodbye because projects that have been completed as early as 2072 have been waiting for this subsidy from the government.

  5. Also, just realised something today: the only way to make money here is by stocks going up so you shouldn’t post bearish news here, since holders will be pissed regardless and there is no way for bears to short a stock here to make some money. So, a lose-lose situation for all if you post bearish posts.

  6. The EPS is till the end of the first quarter…..aba whole year ko lagi EPS tyai huncha bhanya cha ra? Obviously next quarter bata loan repayment bhayo bhane EPS low huncha and that will be indicated in the next reports….

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