Mandu Hydropower’s Profit Surges Fivefold, but Core Operating Indicators Send Mixed Signals

Kathmandu — Mandu Hydropower Limited has reported a sharp rise in net profit for the fourth quarter of fiscal year 2082/83, supported by a strong recovery in electricity sales following the restoration of its flood-damaged hydropower project. However, a decline in operating profit and an increase in finance costs indicate that the company’s overall financial performance was not uniformly strong.

According to the company’s unaudited financial statement, net profit reached Rs 318.55 million by the end of the fiscal year. The company had earned Rs 61.88 million in the corresponding period of the previous year. This represents an increase of 414.80 percent, meaning that annual profit rose to more than five times the previous year’s level.

The most significant improvement was recorded in revenue from electricity sales. Such income increased from Rs 204.74 million to Rs 794.93 million, reflecting growth of 288.26 percent. The increase suggests that electricity generation and commercial operations returned closer to normal after the Bagmati Small Hydropower Project resumed full operation.

Despite the surge in electricity sales, total income increased by only 0.25 percent—from Rs 792.99 million to Rs 794.94 million. This is an important distinction. The figures indicate that the previous year’s total income included a substantial amount from sources other than electricity sales, possibly insurance compensation, exceptional income or another non-operating item. The precise reason cannot be confirmed without examining the detailed notes accompanying the financial statement.

The company’s operating profit declined by 5.82 percent to Rs 690.55 million from Rs 733.22 million. This decline, despite significantly higher electricity sales, suggests that the previous year’s operating result may have benefited from exceptional adjustments or that the company incurred higher restoration, maintenance and operational expenses during the latest fiscal year.

Financing expenses also placed additional pressure on earnings. Finance costs increased by 19.91 percent, rising from Rs 161.89 million to Rs 194.13 million. The increase may reflect higher borrowing costs, continued interest obligations or additional financing used for reconstruction and capacity expansion. A sustained increase in finance costs could limit future profit growth unless electricity production and revenue continue to rise.

Nevertheless, the sharp increase in net profit indicates that the company faced considerably lower exceptional losses, tax expenses or other deductions than in the previous year. In the earlier period, the gap between operating profit and final net profit was unusually wide. The narrowing of that gap appears to have contributed more to the rise in net profit than the marginal increase in total income alone.

Mandu Hydropower’s paid-up capital remained unchanged at Rs 1.36 billion. Its reserves and surplus, however, increased by 58.97 percent to Rs 857.47 million from Rs 539.38 million. The growth in reserves strengthens the company’s balance sheet and provides greater internal capacity to absorb operational shocks, repay liabilities or finance future investment.

The improvement in profitability was also reflected in shareholder indicators. Annualised earnings per share increased from Rs 4.54 to Rs 23.36, while net worth per share rose to Rs 162.88 from Rs 139.55. The company’s price-to-earnings ratio fell sharply from 199.11 times to 34.25 times, mainly because earnings increased substantially. A lower ratio makes the valuation appear more reasonable than a year earlier, although it does not by itself establish that the shares are undervalued.

The company operates the Bagmati Small Hydropower Project along the border of Lalitpur and Makwanpur. The 22-megawatt project was damaged by floods and landslides in Asoj 2081. Reconstruction has since been completed, and the plant has returned to full operation. The company has also secured a power purchase agreement and operating licence for an additional 10 megawatts, raising the approved capacity to 32 megawatts.

The restoration of the project and planned capacity expansion have improved Mandu Hydropower’s earnings outlook. However, the company’s future performance will depend on whether it can maintain stable generation, control financing and maintenance expenses, and convert higher installed capacity into sustained electricity sales.

Overall, the latest results show a strong recovery in final profit and shareholder returns, but the decline in operating profit and the near-flat movement in total income require closer examination. The headline profit growth is impressive, yet the underlying figures suggest that part of the improvement arose from the absence of unusually high expenses or losses recorded in the previous year rather than from revenue growth alone.