Poor Results for NSE: SJVN – Is it Overvalued? Buy or Wait?
Satluj Jal Vidyut Nigam (NSE: SJVN) declined by over 40% in the last 1 week. On February 9th, shares of SJVN opened with a fairly negative sentiment with a gap down opening.
The Hydroelectric power PSU company SJVN rallied from ₹81 in December 2023, to ₹170 in February 2024 gaining nearly 107% in short span of time.
This rally in SJVN was fueled by the Indian Government’s positive statements about PSU and Increased interest towards renewable energy sources. However, is this current price even justified? Let us check this below.
Does current PE of SJVN justifies its price?
The current P/E ratio of SJVN stands at a substantial 55x which is alright if the company is expected to experience significant growth. However, the actual data from results shows something else. SJVN had to faced decline in net sales, operating profit, and a significant drop in profit after tax.
Posting such a sluggish trend of results would normally not support a high P/E ratio. Despite some recent setbacks, experts forecast SJVN to achieve robust growth rates in earnings, revenue, and EPS in years to come. This optimistic outlook may explain a PE ratio higher than the industry average of 44x.
However, the contrast between the announced performance and future growth expected forecasts marks a turning point. Immediately after reaching an all-time high of 170.45, its high P/E of 55x was discarded by investors and shares of SJVN experienced a selloff. With sales and profits falling over the past year, you’d expect investors to be bearish and valuations to tumble.
About SJVN
SJVN is headquartered in Shimla, India operates as a power company. It builds and operates hydro electric dams across India.
‘Nathpa Jhakri’ dam is SJVN’s largest project built on the Sutlej River in Himachal Pradesh. Founded by the government of India, SJVN started its operations from the year 1988.
SJVN's Important supports for allocation
| Support | Value in (₹) |
|---|---|
| Support 1 | 94 |
| Support 2 | 81 |
| Support 3 | 67 |
| Support 4 | 58 |
SJVN Sales growth over years
| Time Period | Growth Rate |
|---|---|
| 1 Year | 21.2% |
| 3 Years | 2.73% |
| 5 Years | 5.65% |
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