Mathillo Mailun Khola Hydropower Posts Stable Profit Growth as Electricity Sales Strengthen Revenue Base

Mathillo Mailun Khola Jalvidhyut Limited MMKJL has reported a steady financial performance for the third quarter of fiscal year 2082/83, supported primarily by growth in electricity sales and stable operational output. The company, which operates a 14.3 MW hydropower project, appears to be gradually stabilizing its income stream following the transition into full commercial operation.

During the review period, the company recorded a net profit of NPR 84.61 million, slightly lower than the NPR 85.65 million reported in the previous quarter but significantly higher than NPR 19 million posted in the corresponding period last year. This year-on-year improvement indicates that the company has moved past its early-stage volatility and is now entering a more predictable earnings phase.

A major contributor to revenue remains electricity sales, which reached NPR 327.49 million during the quarter, compared to NPR 253.26 million in the previous quarter and NPR 289.43 million in the same period last year. This increase reflects improved generation capacity and better utilization of plant operations. Construction-related income, however, remains minimal and largely neutral, indicating that the company is now more focused on operational revenue rather than project construction.

At the operational level, the company reported a gross profit of NPR 290.06 million, up from NPR 227.12 million in the previous quarter. This improvement highlights stronger revenue realization relative to direct costs. However, profitability is still constrained by high amortization and financial expenses, which are typical in capital-intensive hydropower projects.

Amortization expenses alone stood at over NPR 81 million, reflecting the accounting treatment of intangible assets linked to the project’s concession agreement. In addition, financial costs, mainly interest on long-term and working capital loans, amounted to more than NPR 104 million. These two components continue to significantly reduce the company’s bottom-line earnings despite healthy operating profits.

The company’s operating profit stood at NPR 188.78 million, showing solid core business performance. However, once financial costs and other adjustments are accounted for, the net profit margin narrows considerably. This pattern underscores the financial structure of hydropower companies, where high initial debt and capital costs weigh on profitability during early operational years.

From a balance sheet perspective, the company’s total assets stood at NPR 3.10 billion, slightly lower than the previous quarter. A large portion of these assets is tied up in intangible assets and assets under development, reflecting ongoing investments in additional hydropower projects, including cascade developments. Meanwhile, total liabilities remain high at over NPR 2.12 billion, indicating a leveraged capital structure.

On the equity side, the company maintains a paid-up capital of NPR 1 billion, while retained earnings remain negative, although improving compared to the previous year. This suggests that while the company is generating profits, accumulated losses from earlier periods have yet to be fully offset.

In terms of shareholder returns, earnings per share (EPS) stood at NPR 8.46, slightly below the previous quarter but significantly higher than last year’s level. Net worth per share is reported at NPR 97.78, indicating a relatively stable equity base. The return on assets (ROA) stands at 2.72%, showing moderate efficiency in utilizing assets to generate profit.

Despite the improving financial indicators, the company continues to face several structural challenges. High dependence on borrowed capital, exposure to hydrological risks, delays in regulatory approvals, and external risks such as natural disasters and policy uncertainties remain key concerns. Additionally, fluctuations in interest rates and currency values can further impact project viability.

Overall, Mathillo Mailun Khola Jalvidhyut’s third-quarter performance reflects a transition phase from project development to operational stability. While revenue from electricity sales is strengthening and profitability is improving on a yearly basis, high financing and amortization costs continue to limit net earnings. The company’s future performance will largely depend on its ability to manage debt, optimize plant efficiency, and successfully execute its pipeline projects.