Sahas Urja price already assumes 10.47% growth

At Rs 705.5 and 3.91 times book, Sahas Urja's price rests on a single assumption: that returns on equity stay high enough, for long enough, to carry the growth embedded in the multiple. The earnings base is real, but the price is not paying for the past; it is paying for a continuation.

The reverse calculation uses the latest close and the FY 2082/83 Q4 filing. At a 12% cost of equity, an assumption, the price implies 10.47% long-run growth at the latest ROE of 16.46%. At the five-year median ROE of 12.96%, it implies 11.67%. The cost-of-equity values — 10%, 12% and 14% — are desk scenario inputs, not market data. They are the assumptions that turn the multiple into a growth rate.

Earnings Base

The business line that must support the implication is hydropower operating earnings. FY 2082/83 revenue was Rs 284.45 crore, operating profit Rs 197.58 crore and net profit Rs 135.92 crore; EPS was Rs 29.72 and ROE 16.46%. That is the strongest year in the five-year record. FY 2078/79 net profit was Rs 71.53 crore, EPS Rs 20.44 and ROE 12.96%; FY 2079/80 net profit Rs 13.47 crore, EPS Rs 3.85 and ROE 2.38%; FY 2080/81 net profit Rs 41.6 crore, EPS Rs 11.89 and ROE 6.86%; FY 2081/82 net profit Rs 90.27 crore, EPS Rs 23.88 and ROE 12.99%. The recovery is visible, but it is also uneven. The five-year median ROE is 12.96%, well below the latest 16.46%.

Borrowings were Rs 1006.34 crore in FY 2082/83, up from Rs 889.35 crore in FY 2081/82; total assets were Rs 1846.15 crore and total equity Rs 825.96 crore. The operating line is therefore the thing the price is capitalising, not a broad sector recovery.

Assumption Set

Every assumption is explicit. This is a scenario tool, not a recommendation. The setup is perpetual; it has no horizon, and none should be attached to it. The cost of equity is 10%, 12% or 14%, each a desk scenario input. The ROE inputs are 16.46% latest and 12.96% five-year median. The price is Rs 705.5, P/B 3.91, EPS Rs 29.72, book value per share Rs 180.58, earnings yield 4.21% and ROE 16.46%.

The scenarios show how much growth the price requires. At a 10% cost of equity, the price implies 7.78% long-run growth at the latest ROE and 8.98% at the five-year median; with no growth, the price needs ROE of 39.1%. At 12%, the implication is 10.47% at the latest ROE and 11.67% at the median; with no growth, ROE needs to be 46.92%. At 14%, the implication is 13.15% at the latest ROE; at the five-year median, no steady growth rate reaches this price at today's returns, and the price needs returns themselves to rise; with no growth, ROE needs to be 54.74%.

Cost of equity is the bigger swing factor. At the 12% base, implied growth is 10.47%; one point higher cost of equity takes it to 11.81%, while one point higher ROE takes it to 10.12%. The implication is more sensitive to the cost of equity than to the return assumption.

Peer Mirror

Against the sector, Sahas trades at a lower P/E than the median: 23.7 versus 57.4. P/B is 3.91 versus a sector median of 4.08, and ROE is 16.46% versus 3.92%. That puts the price's implied growth in a different position from the sector median: the multiple is not the highest, but the return base is. Peers show the range: API at P/E 22.9, P/B 2.89 and ROE 12.6%; UPPER at 41, 4.31 and 10.5%; CHCL at 45.5, 2.79 and 6.13%; SOHL at 57.7, 4.66 and 8.07%; BPCL at 66.1, 3.08 and 4.67%; SHPC at 69.7, 3.98 and 5.71%. The sector median ROE of 3.92% is far below Sahas's latest 16.46%, so the peer comparison does not validate the growth implication by itself.

The tape is balanced. Buyers paid up in three of the last ten sessions and sellers hit bids in one; six sessions were two-way. Buying faded into the close in four sessions, accumulation-style activity appeared in four, and the latest session was balanced with buy-initiated activity at 48.4%; median buy-initiated activity over the ten sessions was 56%.

At 14% cost of equity and the five-year median ROE, no steady growth rate reaches the price; the price needs returns themselves to rise. The next filing would show the ROE path through net profit, revenue and operating profit, and a higher cost of equity would show the break in the reverse calculation. The implication breaks if the 12% cost-of-equity assumption is too low or if the latest 16.46% ROE is not sustainable.