Kutheli Bukhari Small Hydropower’s Annual Profit Falls 43% on Lower Sales and Higher Depreciation

Kutheli Bukhari Small Hydropower Limited (KBSH) has released its unaudited financial report for the fourth quarter of fiscal year 2081/82, showing a significant drop in net profit compared to the same period last year. The decline is mainly attributed to a fall in electricity sales revenue and a sharp increase in depreciation expenses.

Sharp Decline in Profitability
As of Ashad-end 2082, the company posted a net profit of NPR 8.94 million, down 43.28% from NPR 15.76 million in the previous fiscal year. The fall in earnings was largely due to a 7.80% drop in electricity sales revenue, which declined to NPR 31.13 million from NPR 33.76 million.

Gross profit fell 6.03% to NPR 28.53 million, while operating profit dropped 3.99% to NPR 22.33 million. Depreciation expenses surged by 324.82% to NPR 10.05 million from just NPR 2.37 million last year, significantly impacting the bottom line.

Earnings Per Share and Valuation
Earnings per share (EPS) plunged by NPR 6.26 to NPR 6.67 from NPR 12.93 in the previous year, reflecting reduced profitability. The company’s net worth per share decreased to NPR 136.72 from NPR 161.95, indicating a weakening balance sheet position. However, the price-to-earnings (P/E) ratio soared to 286.46 from 116.70, suggesting that the stock’s market price has risen relative to its reduced earnings — potentially signaling overvaluation.

Capital Structure
Kutheli Bukhari’s paid-up capital increased by 10% to NPR 134.05 million, while reserves and surplus fell 34.80% to NPR 49.23 million, reflecting the drawdown of retained earnings due to lower profits.

KBSH’s FY 2081/82 results highlight pressure on profitability from both the revenue and cost sides. The decline in power sales coupled with a steep rise in depreciation expenses has weighed heavily on earnings. The jump in the P/E ratio despite falling EPS raises concerns about the stock’s current valuation and sustainability of investor expectations. Going forward, stabilizing sales volumes, controlling costs, and managing asset depreciation will be critical for improving the company’s earnings performance.