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