18% Dividend: Navratna Energy PSU Stock SJVN Soars 7% After Signing MoU With Bihar Govt; Buy Or Not?

SJVN Limited's stock surged by 7% during Wednesday's morning trade after the company announced the signing of a Memorandum of Understanding (MoU) with the Bihar government. The agreement pertains to the development of the 1,000 MW Hathidah Durgawati pumped storage project (PSP) along with other PSPs.

Market Performance

SJVN's share price began the day on a positive note, opening at Rs 107.20 on the Bombay Stock Exchange (BSE), up 2.7% from its previous close of Rs 104.40. The stock continued its upward momentum, reaching an intraday high of Rs 111.65, translating to a 7% gain.

Although the share price is still significantly below its 52-week high of Rs 170 recorded in February 2024, SJVN has delivered multibagger returns over the past two years. Since the beginning of 2023, the stock has tripled in value. As of 2:30 pm on the National Stock Exchange (NSE), the shares were trading at Rs 110.22, reflecting a gain of over 5.5% during the day. Over the past year, SJVN has delivered consistent returns, recording gains of nearly 20%.

Project Details

The Hathidah Durgawati PSP is a major renewable energy initiative proposed on the Durgawati River in Bihar's Kaimur district. The project boasts an installed capacity of 1,000 MW (comprising four units of 250 MW each) and is designed to generate a daily peak energy of 6.325 million units (MU). On an annual basis, the project is expected to produce 2,308.65 MU of peak energy.

The estimated cost for the project stands at rs 5,663 crore, with a levelized tariff of Rs 9.39 per kWh, assuming a pumping energy rate of Rs 3 per kWh at February 2024 price levels. The project aligns with SJVN's mandate as a nodal agency for the development of pumped storage projects in Bihar, a responsibility assigned by the Ministry of Power in August 2022.

After being designated as the nodal agency for pumped storage projects (PSPs) in Bihar, SJVN identified four potential projects: the 400 MW Telharkund PSP, 345 MW Sinafdar PSP, 225 MW Panchgotia PSP, and the 1,600 MW Hathidah Durgawati PSP. Following feasibility studies, the Hathidah Durgawati PSP was determined to be the most viable among them.

Renewable Energy Development

Beyond Bihar, SJVN is actively pursuing the development of around 12,000 MW of pumped storage projects across various states, including Maharashtra, Karnataka, Mizoram, and Himachal Pradesh.