Mulitbagger PSU receives Rs 550 crore solar power project from Gujarat Urja Vikas Nigam: Company forecasts big revenue through REIA Mode

Management indicates that the additional income from FY26 to FY30 is estimated to be around Rs 4,000 crores.

In the dynamic landscape of power stocks, SJVN Ltd, a Mini Ratna, Category-I and Schedule –‘A’ CPSE under administrative control of Ministry of Power, Govt. of India, was incorporated on May 24, 1988 as a joint venture of the Government of India (GOI) and the Government of Himachal Pradesh (GOHP)., has been riding a robust bull run. Over the past year, SJVN's stock has surged an impressive 237.54 per cent, establishing itself as a multibagger stock. As of 2024, the stock has already advanced by 28 per cent. In the latest trading session on Thursday, the stock closed approximately 3 per cent higher at Rs 116.45 per share, reaching its 52-week high of Rs 118.90 during the day.

In a significant development, SJVN announced its successful bid for the full quoted capacity of a 100 MW Solar Power Project through an e-Reverse Auction conducted by Gujarat Urja Vikas Nigam Limited (“GUVNL”). The company secured the project at a rate of Rs 2.54 per Unit on a Build Own and Operate basis, following a tariff-based competitive bidding process of GUVNL Phase XXI.

This ground-mounted solar project, estimated to cost Rs 550 crores, will be developed by SJVN through its wholly-owned subsidiary, SJVN Green Energy Limited (“SGEL”). The project, located in Khavda, Gujarat, will be executed under an EPC contract in the Solar Park developed by Gujarat Industrial Power Corporation Limited.

The Power Purchase Agreement is set to be executed upon the issuance of the Letter of Award from GUVNL. The project is anticipated to generate approximately 252 million units in its first year of commissioning, with a cumulative energy generation of about 5,866 million units over 25 years. Additionally, the commissioning of this solar project is expected to reduce carbon emissions by 2,87,463 tonnes.

With this addition, SJVN's project portfolio now stands at an impressive 59,872 MW, aligning with the company's ambitious targets of achieving 12,000 MW by 2026, 25,000 MW by 2030, and 50,000 MW installed capacity by 2040.

Notably, SJVN has become the fourth Renewable Energy Implementing Agency (REIA), joining the ranks of SECI, NTPC, and NHPC. Through REIA, the company collects demand from states or discoms, invites bids from developers, and signs Power Purchase Agreements with the states' discoms.

In a strategic move, SJVN's revenue projection through REIA mode is set to reach Rs 231 crores in the first year (FY26) and double in the following year. The third-year capacity is expected to triple, leading to a substantial increase in revenue in subsequent years. Management indicates that the additional income from FY26 to FY30 is estimated to be around Rs 4,000 crores.

It's worth mentioning that the President of India holds a substantial 55 per cent stake in SJVN. With the company currently reporting a net profit of Rs 1,016 in the trailing twelve months and a dividend yield of 1.6 per cent, the question arises: Does SJVN present a compelling long-term investment opportunity? Share your thoughts in the comment section below.