Why SJVN Share Price is Falling

There was peak hysteria at the top of the market not long ago in January 2024.

Most people were convinced that stocks especially the PSUs, and solar companies, among others could only go up.

Amid that chaotic environment, PSU company SJVN also shot up and touched its all-time high levels.

But as the market took froth of the expensive valuations and considered the fact that most of the positives would be priced in, a short-term fall was inevitable.

Not surprisingly, share price of SJVN has come down from its all-time high and fallen big time in the past two trading sessions.

Last Friday, the stock fell from Rs 151 to Rs 140, and this was followed by a 20% fall on Monday to Rs 114.

Shares of SJVN are down over 30% in just two sessions.

Let's find out why and whether there's more pain ahead.

#1 Weak Q3 Results

Last week on Friday, SJVN shares plunged 10% following its December 2023 quarter earnings announcement.

This was followed by a 20% fall on Monday as the company missed street estimates.

SJVN reported a 51.6% year-on-year (YoY) drop in net profit at Rs 1.4 billion (bn) for the quarter under review.

The market was expecting SJVN to post a net profit somewhere around Rs 2.8 bn.

The fall in net profit was due to lower revenues which declined to Rs 6.1 bn from Rs 7.1 bn in the same period a year ago.

During the results announcement, the board of directors also approved an interim dividend of Rs 1.15 per equity share for the financial year 2023-24.

#2 Profit Booking

Following a sharp rally of over 330% in the past one year, many experts were projecting a short-term fall as it only makes sense to take some money off the table.

So the weak Q3 results could be a reason that investors decided to book some profits in SJVN.

Shares of SJVN are way above its 5-year average PE of 7.1 times, currently trading at Rs 114 with a PE multiple of 55.2x.

The stock was also trading at more than 3.2 times its book value.

Note that PSU stocks across the board have rallied and any missed estimate or lapsed project could result in a sharp fall in their stock prices.

Experts started to voice their concerns about this topic following a sharp rally in PSU bank stocks last week.

What Next?

While everyone is distracted by this short-term price movement, SJVN does have strong growth prospects and several factors working in its favor.

It has ambitious plans to expand its renewable energy capacity. Over the next three years, the company aims to add 10,000 MW of renewable energy capacity.

SJVN has a robust background in hydropower generation and a successful track record in implementing wind and solar energy projects.

Majority of its shareholding is with the central and state government entities, and the company is strategically important to the government in improving the share of power from renewable sources, especially hydropower.

To know more about SJVN's long term plan, check out our detailed report: This Company is Transforming into a Huge Solar Energy Giant.

How SJVN Share Price has Performed Recently

In the past two trading sessions, SJVN share price has crashed over 30%.

Despite this recent fall, SJVN share price is up 22% in the past one month.

SJVN has a 52-week high of Rs 170 touched on 5 February 2024 and a 52-week low of Rs 30 touched on 27 March 2023.

Take out the recent fall and SJVN share price would show 335% gains in the past one year.

Here's a table comparing SJVN with its industry peers -

Comparative Analysis

Company	SJVN	Inox Wind Energy	Nava	RattanIndia Power
ROE (%)	10.1	-54.9	22.2	0
ROCE (%)	9.1	-10.6	18.9	8.7
Latest EPS (Rs)	2.5	-133.3	67.8	-4.2
TTM PE (x)	55.5	-	7.3	-
TTM Price to book (x)	3.8	5.6	1.1	-0.9
Dividend yield (%)	1.3	0	1.2	0
Industry PE	23.9
Industry PB	3.6

Data Source: Ace Equity

About SJVN

SJVN, formerly known as Satluj Jal Vidyut Nigam, is an Indian public sector undertaking involved in hydroelectric power generation and transmission.

It was incorporated in 1988 as Nathpa Jhakri Power Corporation, a joint venture between the Government of India and the Government of Himachal Pradesh.

To know more about the company, check out the SJVN fact sheet and quarterly results on our website.

You can also compare SJVN with its peers:

SJVN vs Torrent Power

SJVN vs Indian Energy Exchange

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...