Manakamana Engineering Hydropower Limited Returns to Profit with Rs. 19.52 Million in Q1 FY 2082/83

Manakamana Engineering Hydropower Limited (MEHL) has published its unaudited first-quarter financial report for the fiscal year 2082/83, revealing a net profit of Rs. 19.52 million. This marks a significant turnaround compared to the loss of Rs. 20.79 million recorded in the preceding quarter (Ashad 2082). The improvement indicates a strong recovery in operational performance, efficient cost control, and stable power generation.

Revenue and Profitability

During the first quarter ending Aswin 2082, MEHL reported revenue of Rs. 52.06 million, up from Rs. 48.95 million during the same quarter last fiscal year. The cost of sales declined to Rs. 5.60 million from Rs. 11.74 million, resulting in a gross profit of Rs. 46.46 million, a notable increase from Rs. 37.20 million in Q1 of the previous year.

Operating expenses remained under control, with personnel expenses at Rs. 2.05 million and administrative expenses at Rs. 2.56 million. Depreciation and amortization expenses stood at Rs. 13.70 million, consistent with the company's large infrastructure base.

After accounting for finance costs of Rs. 13.80 million, the company achieved a profit before tax of Rs. 13.52 million and ended the quarter with a net profit of Rs. 19.52 million. This strong recovery contrasts sharply with the loss in the previous quarter and represents a positive shift in the company’s financial momentum.

Earnings Ratios and Valuation Indicators

Manakamana Engineering’s Earnings per Share (EPS) improved significantly to Rs. 2.44, compared to a negative EPS of Rs. -2.60 in Ashad 2082. The Net Worth per Share rose to Rs. 66.21, while the Return on Assets (ROA) stood at 5.86%, reflecting more efficient utilization of company assets.

The Price-to-Earnings (P/E) ratio reached 156.93, indicating high investor valuation relative to current earnings, and the current ratio improved to 0.97, showing better short-term liquidity and financial stability.

Balance Sheet Position

As of Aswin 2082, the company’s total assets were valued at Rs. 1.33 billion, slightly higher than in the previous quarter. Total equity stood at Rs. 529.46 million, supported by share capital of Rs. 800 million and retained earnings of Rs. -270.53 million, reflecting a reduction in the accumulated deficit.

Non-current liabilities were reported at Rs. 737.86 million, while current liabilities stood at Rs. 67.97 million. The gradual reduction in long-term borrowings indicates the company’s effort to manage debt effectively and maintain a balanced capital structure.

Stock Market Performance

Listed on the Nepal Stock Exchange (NEPSE) since 2080, Manakamana Engineering Hydropower’s share price during the first quarter ranged between Rs. 372.40 and Rs. 510, closing at Rs. 382.90.

During this period, the company saw 10,202 transactions, with 869,902 shares traded, totaling a turnover of Rs. 397.16 million. The stock maintained moderate investor interest despite volatility in the overall hydropower sector index.

Operational Performance

MEHL operates the Ghatte Khola Small Hydropower Project, which has been generating electricity since Kartik 23, 2077 B.S. The company’s production is dispatched through the Nepal Electricity Authority (NEA), ensuring stable income from power sales.

Management emphasized that maintenance operations are being optimized to ensure uninterrupted generation and cost efficiency, with the technical team focusing on equipment reliability and system stability.

Challenges and Strategic Initiatives

The company identified key challenges affecting operations:

• Internal: Retention of skilled manpower and operational efficiency.

• External: Scarcity of hydropower spare parts, adverse weather, and hydrological risks.

To address these, MEHL has emphasized internal resource management and regular maintenance. Furthermore, the company has submitted a proposal to the Electricity Regulatory Commission (ERC) to issue right shares in a 1:1 ratio—a move aimed at strengthening its equity base and supporting future expansion plans.

The Board of Directors reaffirmed their commitment to strong corporate governance, regulatory compliance, and financial transparency. The financials have been prepared in line with the Nepal Financial Reporting Standards (NFRS), ensuring consistency and accountability.

The management team highlighted its focus on maintaining optimal asset utilization, risk management, and long-term project sustainability.

Manakamana Engineering Hydropower’s Q1 results reflect a strong financial turnaround following quarters of pressure from operational and financial costs. The company’s ability to post a net profit indicates improved efficiency, cost control, and consistent revenue from stable hydropower generation.

The rise in EPS and ROA reinforces financial recovery momentum, while the reduced retained loss suggests improving equity health. However, the high P/E ratio signals that investor expectations remain strong and future performance consistency will be crucial to justify such valuations.

The proposed right share issue could further enhance liquidity and reduce financial leverage, positioning the company for sustained growth in the coming quarters.