Bhujung Hydropower IPO 2082: SEBON Approval, Credit Rating & Complete Investment Analysis

Bhujung Hydropower IPO 2082: SEBON Approval, Issue Details & Investment Analysis

SEBON Approves Bhujung Hydropower Limited IPO

The Securities Board of Nepal (SEBON) has officially approved the Initial Public Offering (IPO) of Bhujung Hydropower Limited (BJHL) on 11th Mangsir, 2082 (November 27, 2025). The company will soon open its public issue, offering investors an opportunity to participate in Nepal's renewable energy sector.

Bhujung Hydropower IPO Details

Key IPO Information

Share Distribution Pattern (Expected)

While the final allocation breakdown hasn't been disclosed yet, based on standard IPO practices, the distribution may follow this pattern:

• General Public: 70-80% (14-16 lakh shares)
• Mutual Funds: 5% (1 lakh shares)
• Employees: 3-5% (60,000-1 lakh shares)
• Project-Affected Locals: 2-3% (40,000-60,000 shares)

Note: Official allocation will be announced by Kumari Capital Ltd.

Credit Rating: Important Consideration

ICRA Nepal Rating Downgrade

Previous Rating: [ICRANP-IR] B+ (B Plus)

Current Rating: [ICRANP-IR] B- (B Minus)

Rating Date: Recently downgraded

What Does B- Rating Mean?

The B- issuer rating indicates:

• High Risk: Significant risk of default on financial obligations
• Vulnerability: Highly vulnerable to adverse economic conditions
• Limited Capacity: Limited capacity to meet financial commitments
• Cautionary Signal: Investors should exercise extreme caution

Why Was the Rating Downgraded?

The downgrade from B+ to B- suggests:

• Deteriorating financial performance
• Cash flow challenges
• Project implementation delays
• Increased debt burden
• Adverse market conditions
• Management or operational concerns

This downgrade is a significant red flag for potential investors and requires careful evaluation.

About Bhujung Hydropower Limited

Company Overview

• Establishment Year: 2015 (2072 BS)
• Company Type: Private Limited (under conversion to Public Limited)
• Head Office: Old Baneswor, Kathmandu
• Business Sector: Hydropower Generation

Project Details: Upper Midim Hydropower

• Project Name: Upper Midim Hydropower Project
• Project Type: Run-of-River (ROR)
• Licensed Capacity: 7.5 MW (Megawatts)
• Project Location: Kwhlosothar Rural Municipality, Lamjung District
• Project Status: Under Development
• River Basin: Midim Khola

Run-of-River Technology

Run-of-river projects have several characteristics:

Advantages:

• Minimal Environmental Impact: No large dams required
• Lower Investment: Compared to reservoir-type projects
• Consistent Generation: Depends on river flow

Disadvantages:

• Seasonal Variation: Lower generation during dry season
• Limited Storage: Cannot store water for peak demand

Investment Analysis

Risk Factors to Consider

1. Credit Rating Downgrade

The downgrade to B- is the most critical concern, indicating:

• Financial stress
• Higher default risk
• Potential operational challenges

2. Project Development Stage

• Project still under development
• No revenue generation yet
• Construction risks remain

3. Small Capacity

• 7.5 MW is relatively small
• Limited revenue potential
• High per-MW development costs

4. Market Conditions

• Hydropower sector facing challenges
• Power Purchase Agreement (PPA) rate concerns
• Transmission line constraints

5. Seasonal Generation

• Run-of-river projects have lower dry season output
• Cash flow seasonality

Potential Positive Factors

Despite the risks, some factors worth noting:

• Renewable Energy Sector: Government priority sector
• Location: Lamjung has good hydropower potential
• License Secured: Project has necessary approvals
• Experienced Promoters: (Subject to verification)
• Small Project: Easier to complete than mega-projects

Should You Apply for Bhujung Hydropower IPO?

For Conservative Investors: AVOID

The B- credit rating is a clear warning signal. Conservative investors seeking stable returns should look for companies with at least BB+ or higher ratings.

For Risk-Taking Investors: EXTREME CAUTION

If you're willing to take high risks:

• Apply only with money you can afford to lose
• Don't invest more than 2-3% of your portfolio
• Understand project completion risks
• Monitor company announcements closely
• Be prepared for potential losses

Better Alternatives

Consider these options instead:

1. Established Hydropower Companies: Companies with operational plants
2. Higher-Rated IPOs: Look for BB+ or above ratings
3. NEPSE Secondary Market: Buy proven hydropower stocks
4. Diversified Mutual Funds: Spread risk across multiple companies

IPO Application Process (When Announced)

Step-by-Step Guide

Step 1: Check Eligibility

• Must have demat account
• CRN number from Kumari Capital or sub-registrar
• Sufficient bank balance

Step 2: Access MeroShare

• Login to your MeroShare account
• Navigate to "Apply for IPO"

Step 3: Fill Application

• Select Bhujung Hydropower IPO
• Enter desired units (minimum 10 units)
• Calculate investment amount

Step 4: Submit

• Review details carefully
• Submit application
• Amount will be blocked in bank

Step 5: Wait for Allotment

• Check results on MeroShare
• Shares credited if allotted
• Refund if not allotted

Application Tips

• Apply Early: During the first 2-3 days
• Check Bank Balance: Ensure sufficient funds
• Keep Documents Ready: In case of verification
• Monitor Announcements: Follow Kumari Capital updates

Expected Timeline

Based on typical IPO processes:

Timeline may vary based on regulatory requirements

Price Prediction & Opening Range

Listing Day Expectations

Given the B- credit rating and project development stage, opening range predictions are challenging:

• Pessimistic Scenario: Rs. 90-95 (5-10% discount)
• Neutral Scenario: Rs. 100-110 (Par to 10% premium)
• Optimistic Scenario: Rs. 115-125 (15-25% premium)

Factors Affecting Opening Price

Negative Factors:

• Credit rating downgrade
• Project under development
• Small capacity (7.5 MW)
• High-risk profile

Positive Factors:

• Hydropower sector sentiment
• Overall NEPSE market conditions
• Allotment ratio (if oversubscribed)
• Sector rotation into energy stocks

Most Likely Outcome: Modest listing gains of 5-15%, but with significant downside risk.

Comparison with Other Hydropower IPOs

Recent Hydropower IPO Performance

Note: Past performance doesn't guarantee future results

Red Flags Summary

• Credit rating downgrade (B+ to B-)
• High default risk indicated by ICRA Nepal
• Project under development (no revenue yet)
• Small capacity limiting revenue potential
• Run-of-river limitations (seasonal variation)
• Limited public information about promoters and financials

Expert Opinion

Financial analysts recommend:

"The credit rating downgrade to B- is a serious concern that cannot be ignored. While the hydropower sector has long-term potential, this particular issue carries elevated risks. Retail investors should prioritize capital preservation over speculative gains."

"If the company can successfully complete the project and secure favorable PPA rates, there's long-term upside. However, the journey is fraught with risks that most retail investors may not be equipped to handle."

Frequently Asked Questions

• Q1: When will Bhujung Hydropower IPO open?
  The exact dates haven't been announced yet. Monitor Kumari Capital Ltd and SEBON announcements.
• Q2: Is the B- rating very bad?
  Yes, B- indicates high risk and significant concerns about the company's ability to meet financial obligations.
• Q3: Should I apply given the poor rating?
  Only if you fully understand and can afford the high risks involved. Most investors should consider safer alternatives.
• Q4: What's the minimum investment required?
  Minimum 10 units × Rs. 100 = Rs. 1,000
• Q5: Can the rating improve later?
  Yes, if the company demonstrates improved financial performance and project progress, ICRA Nepal may upgrade the rating.
• Q6: What is run-of-river hydropower?
  A type of hydropower that generates electricity using the natural flow of river water without significant storage capacity.

Conclusion

The Bhujung Hydropower IPO presents a high-risk, high-uncertainty investment opportunity. While SEBON approval is a necessary step, the credit rating downgrade to B- cannot be overlooked. This rating indicates significant financial stress and elevated default risk.

For Most Investors: This IPO is NOT RECOMMENDED due to excessive risk.

For Risk-Takers: If you choose to participate, limit exposure to a very small portion of your portfolio and be prepared for potential losses.

Better Strategy: Consider investing in:

• Established hydropower companies trading on NEPSE
• Higher-rated IPOs (BB+ or above)
• Diversified mutual funds
• Companies with proven track records

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Credit ratings and market conditions can change. Please conduct your own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.