Hi @Yogesh_s, what are your thoughts on SJVN at current valuations?
If the DDT gets abolished, it would be a huge positive for cash rich, high dividend paying companies like SJVN. The dividends would easily go up by 15-20% and the dividend yield would rise to around 10%!
I wonder if these dividends are sustainable for very long. Govt has been extracting 100% of profits as dividend and all fresh investments are being funded by debt.
If that was the case, the overall debt should’ve been rising. Whereas, Total long term debt has been consistently falling since 2015 from 2480cr to 1940cr as of 2019.
Secondly, company has multiple projects at different stages of completion. Even at the slow government pace, there would be atleast 1-2 projects which would get completed in next 3-5 years. This would lead to substantial jump in topline and bottomline.
Thanks for pointing out.
But after 9 years since its listing it is at same price. Dividends have been only savior.
No denying there!
Historically, the company has remained in the multiple range of 6-10 PE & 0.8 - 1.25 PB. Right now, it’s close to the bottom of both the ranges.
Considering the sector the company operates in, we can’t expect gradual growth in topline & bottomline, and it’s bound to be patchy.
Clearly IPO has came with high valuations.
There is not much YOY increase in Revenue as well as PAT. Long Term Borrowings are steadily decreasing. Not it is providing good Dividend Yield as 8 (%).
Disc: Still tracking and have added Dividend_Tracker list.
Fantastic result from SJVN. Around 25% growth in top line and 50% growth in bottom line. If this trend continues, it is bound to lead to handsome growth in dividends, followed by price.
Distribution companies buy power from power generators. There are massive delays in payments and that is why many private thermal power plants are in distress (there are also other reasons like low capacity utilisation due to cheaper solar/wind power availability). What I am wondering is, is there a regulation or an arrangement which forces distribution companies to make prompt payments to SJVN?
I don’t know much about SJVN and I am primarily interested in it because of high dividend yield. I don’t hold any shares.
SJVN is a wonderful business with a terrible owner. Till the Himalayan rivers flow, this company should keep generating great cash.
The only thing is the owner. There is talk of SJVN being sold to NTPC. You buy a stock (SJVN) for dividend yield, and suddenly, you find that it got merged with NTPC, and now your dividend yield is half of what you expected.
Does these Dividend paying PSU’s have any value now, as the dividends are TAXED at our TAX rate ? SHould we even consider investment in these ( even if that meant only for Dividends)
I think depends on few factors below -
- Does the company increase the payout as with new rules, it saves on DDT
- Is the dividend of the company growing every year (EPS should be growing every year) - This takes care of the fact that the business is investment worthy
- Is capital allocation of the company proper - Even cash generating machines can falter by improper capital allocation and can result in dividends reducing drastically. This takes care of the fact that the management of the firm is investment worthy.
- Lastly, your tax bracket - But this is just for sake of calculating your actual yield. You cannot stop earning just because the tax bracket is highest. Every aspect has taxation involved. We need to feel fine paying taxes in order to take the right decisions. Feel better that you are complaint and contributing to nation. Because the moment we think of it as a burden and try to look for ways to avoid and base our investment decisions on those premise - chances are we may not take the best decision.
As always, I can be completely wrong in my assessments
Any updates on this ? it was planned to be completed within first 100 days of 2nd term of modi gov. One year passed and a pandemic is also passing, do the plans remain .
Disc: Not invested , tracking but won’t if merger goes through
SJVN bags 75 MW solar project in Uttar Pradesh (quoted tariff 2.68/KWh for 25 years)
Disclosure: No investments
SJVN Green Energy bags 200 MW solar project in Maharashtra Link