This state-owned power generation stock has zoomed 100% in 3 months

Shares of SJVN hit a new high of Rs 73 on rallying 14% today after the company signed a power purchase agreement with Bhakra Beas Management Board for developing a solar project

Shares of SJVN rallied 14 per cent to hit a new high of Rs 73 on the BSE in Monday’s intra-day trade as trading volumes jumped over four times as against the 2-week average. 

The gains came after the company signed a power purchase agreement (PPA) with Bhakra Beas Management Board (BBMB) for developing a solar project. 

The company signed the agreement via its wholly owned subsidiary SJVN Green Energy for a 18 MW solar power project. The project, which is scheduled to be commissioned by August 2024, will be developed on the land parcels of BBMB in the states of Himachal Pradesh & Punjab. 

The project has been secured through open competitive bidding at a tariff of Rs 2.63 in the e-reverse auction organized by Punjab Energy Development Agency. The project will generate 39.42 million units of energy in the first year of operation and the cumulative energy generation over a period of 25 years would be about 917 million units.

The PPA for the power produced from the project has been signed for 25 years. Commissioning of this project is expected to reduce 44,923 tonnes of carbon emission.

In the past three months, the stock of the state-owned power generation company has zoomed 100 per cent from level of Rs 36.58.

At 11:11 AM today: SJVN was quoting 13 per cent higher at Rs 72.20, as compared to 0.44 per cent rise in the S&P BSE Sensex. A combined 81 million equity shares of the company had changed hands on the NSE and BSE

SJVN, a leading CPSU under Ministry of Power, plans to install over 10,000 MW renewable energy capacity in three years while progressing towards its shared vision of becoming a company of 25000 MW by 2030 and 50000 MW by 2040.

According to SJVN, the outlook of India’s power generation looks promising with expected increase in industrial production and Government of India’s mission to provide 24x7 electricity to all.

SJVN has prominent role to supply affordable power to provide 24x7 electricity to all. SJVN has already developed 7 power stations with installed capacity of 2091.5 MW a (including two hydro, two wind and three solar project) across the country.

SJVN is diversifying its portfolio by taking different renewable energy projects, details of which are mentioned elsewhere in this report. Subsequent to the announcement of Green Hydrogen Policy by Govt. of India, SJVN has also started taking up preliminary actions to set up Pilot Green Hydrogen as R&D Project in Himachal Pradesh.

With fourteen projects under construction, SJVN is poised to add 3765 MW during FY 2024 and 1598 MW during FY 2025. Commissioning of these projects will aid the company achieve strong financials and cash flows to emerge a stronger and bigger company, SJVN said in its FY23 annual report.

India Ratings and Research (Ind-Ra) has affirmed SJVN’s long-term issuer rating at ‘IND AA+’ with a stable outlook.

According to the rating agency, once the under-construction (UC) projects are commissioned, leading to exposure to different counterparties over the medium term, the counterparty profile is likely to improve. 

While the power purchase agreements (PPAs) are in place for 85 per cent capacity of its upcoming Buxar power plant, the company is tying up PPAs for the other upcoming plants including Arun III hydro-electric project in Nepal(900MW), Bikaner solar under central public sector enterprise scheme, and Naitwar Mori hydroelectric project (60MW).

For hydro projects, the company could enter into medium term PPAs. 50 per cent of tie-up for the Bikaner solar project has already been made for long term, while the remaining would be tied up before the commercial operations date, given the competitive tariff, Ind-Ra said.