Hydropower is considered as one of the most actively traded sector in NEPSE, creating the best hydropower stocks in NEPSE in 2026 a majorly searched topic in 2026. This article highlights those specific hydropower companies which hold the potential to provide traders and Investers with good profit.
Disclaimer: This article is for educational and informational purpose only and is not a financial advice. Stock market is a high-risk environment, so trade responsibly and always understand the risks involved.
Why Hydropower is a essential Sector in NEPSE ?
Hydropower has become the largest sectors of the Nepalese stock market after the huge flow of hydropower based IPOs being listed in NEPSE. Unlike many industries that depend mainly on domestic consumption, hydropower companies generate electricity from Nepal’s water resources and sell power under agreements with the Nepal Electricity Authority (NEA).
As of mid-March 2026, Nepal had 97 hydropower companies listed on NEPSE. The Nepal Rastra Bank reported that hydropower companies represented 15.9% of total stock-market capitalization, while BFIs and insurance companies together represented 52.2%. (Nepal Rastra Bank)
The sector also attracts significant trading activity. In Shrawan 2083, hydropower companies accounted for 46.17% of total NEPSE turnover, according to monthly NEPSE data reported by Merolagani. (Merolagani)
Nepal’s Hydropower Potential and Government Incentives
Nepal has substantial hydropower resources, creating long-term development potential for the electricity industry. The government has maintained policies and procedures supporting hydropower development, including frameworks for private-sector projects and the People’s Hydropower Programme. (Energy and Water Ministry)
Another important factor is the Power Purchase Agreement (PPA). Hydropower companies generally sell electricity to NEA according to contractual terms and tariffs. NEA publishes its PPA tariff framework for run-of-river, peaking run-of-river and storage projects. (Nepal Electricity Authority)
This provides a degree of revenue visibility, but investors still need to consider generation levels, PPA terms, project costs, debt and transmission availability.
Role of Hydropower in NEPSE’s Overall Market Cap
Hydropower represents a significant portion of NEPSE’s total market capitalization. The 15.9% share reported by Nepal Rastra Bank in March 2026 shows why movements in hydropower shares can have a noticeable effect on overall market sentiment. (Nepal Rastra Bank)
However, market capitalization and trading volume are different measures. A sector can have a large number of listed companies and very high trading activity without every company having equally strong fundamentals.
For this reason, investors should evaluate individual hydropower companies rather than treating the entire NEPSE hydropower index as one investment.
How to Evaluate a Hydropower Stock Before Investing
Finding the best hydropower stocks in Nepal requires more than looking at the share price. Investors should examine the company’s earnings, project capacity, debt, PPA, dividend history, valuation and future projects.
EPS (Earnings Per Share) and Profitability
EPS shows how much profit a company generates for each outstanding share.
For example, based on FY 2082/83 figures:
- SAHAS: EPS of Rs. 29.72
- API: EPS of around Rs. 15.06
- BPCL: EPS of Rs. 9.84
- CHCL: EPS of Rs. 7.59
- SHPC: EPS of Rs. 7.85
These numbers should not be compared blindly. Different companies have different capital structures, project ages, debt levels and investment portfolios.
A company with rising EPS over several years may deserve closer fundamental analysis than one whose earnings are highly irregular.
Dividend History and Payout Consistency
Dividend history is particularly important when researching mature hydropower companies.
Investors should check:
- Cash dividend
- Bonus shares
- Total dividend
- Dividend consistency
- Retained earnings
- Ability to generate future cash flow
For example, CHCL distributed a 12% total dividend for FY 2081/82, consisting of 8% bonus shares and 4% cash dividend. (Sun Securities)
SAHAS distributed a 22.11% total dividend for FY 2081/82, consisting of 21% bonus shares and 1.11% cash dividend. (Sun Securities)
A historical dividend, however, does not guarantee a future dividend.
PE Ratio and Valuation
The price-to-earnings ratio, or P/E ratio, compares a company’s share price with its earnings per share.
A lower P/E does not automatically mean a stock is cheap, and a higher P/E does not automatically mean it is expensive.
For example, September 2026 market data showed:
| Company | FY 2082/83 EPS | Approx. P/E* |
|---|---|---|
| CHCL | Rs. 7.59 | 46.7x |
| SHPC | Rs. 7.85 | 65.4x |
| BPCL | Rs. 9.84 | 68.6x |
| API | Rs. 15.06 | 22.2x |
| SAHAS | Rs. 29.72 | 23.5x |
*P/E changes with the market price, so these figures are time-sensitive. CHCL, API, BPCL, SHPC and SAHAS figures are based on available September 2026 market data. (Sun Securities)
Installed Capacity (MW) and Plant Type
Installed capacity tells you the maximum power-generating capacity of a project under its designed conditions.
But more MW does not automatically mean a better investment.
Investors should also consider:
- Annual energy generation
- Plant load factor
- Dry-season generation
- Run-of-river or storage design
- PPA tariff
- Project age
- Remaining PPA period
Run-of-river projects can be particularly sensitive to seasonal river flows, while storage projects can have different generation characteristics and development costs.
Debt-to-Equity and PPA Terms
Hydropower projects require significant upfront capital. Debt can therefore have a major effect on profitability.
Before investing, check:
- Total debt
- Debt-to-equity ratio
- Interest expense
- Loan repayment schedule
- Refinancing requirements
- PPA duration
- PPA tariff
- Escalation provisions
- Minimum energy provisions
- Transmission arrangements
A company with declining debt and stable operating cash flow can have a very different financial profile from a company still carrying large project debt.
NEPSE Hydropower Sector Overview in 2026
The hydropower sector has remained one of the most active parts of NEPSE during 2026. At the same time, the sector has experienced considerable volatility.
The NEPSE Hydropower Index recorded substantial short-term movements during 2026. For example, the hydropower sub-index was reported at 3,598.63 on September 23, 2026, compared with a 2026 opening level of 3,339.43. Its 2026 closing high was 4,129.68. (NepseData)
Recent Performance Trends: Volatility and Monsoon/Flood Impact
Hydropower stocks can be particularly sensitive to monsoon conditions.
Heavy rainfall can have two opposite effects:
- More water can increase electricity generation for some projects.
- Floods and landslides can damage headworks, roads, transmission lines and other infrastructure.
The second risk became visible in 2026. Following flood-related damage, the Hydropower Index fell 2.84% on August 26, while 101 hydropower companies declined that day. (sharesansar.com)
The Bhotekoshi floods in August 2026 also affected investor sentiment toward hydropower stocks as investors assessed potential infrastructure damage and reconstruction costs. (Kathmandu Post)
Institutional vs. Retail Investor Interest
Hydropower has a particularly broad retail-investor base in Nepal. A sector report using CDSC data reported around 8.9 million current shareholders across 91 listed hydropower companies as of February 2025, highlighting the sector’s deep public participation. (Ippan)
Trading activity also shows strong investor interest. Hydropower companies accounted for 46.17% of NEPSE turnover in Shrawan 2083. (Merolagani)
This high activity can create both liquidity opportunities and significant short-term price volatility.
Best Hydropower Stocks in NEPSE to Watch in 2026
There is no single official list that defines the “best” hydropower stocks in Nepal. The companies below are therefore presented as stocks to research, not as guaranteed investments or a ranking.
The selection focuses on established operations, notable project capacity, earnings, dividend records, market participation and/or future growth characteristics.
Chilime Hydropower Company Limited (CHCL) — Overview & Key Metrics
Chilime Hydropower Company Limited is one of the more established names in Nepal’s hydropower sector. The company was incorporated in 1995 and operates a 22.1 MW hydropower plant in Rasuwa. Nepal Electricity Authority owns 51% of the company. (sharesansar.com)
Key metrics:
- Symbol: CHCL
- Installed capacity: 22.1 MW
- Project type: Hydropower
- FY 2082/83 EPS: Rs. 7.59
- Book value: Rs. 123.90
- P/E: Around 46.7x based on September 2026 data
- Latest dividend: 8% bonus + 4% cash = 12% total for FY 2081/82 (Sun Securities)
Why it is notable:
CHCL has a long operating history and a significant institutional connection through NEA’s majority ownership. Its 22.1 MW plant has been operating since 2003 and sells electricity to NEA under a long-term PPA. (sharesansar.com)
Its dividend history is also notable, although investors should consider the declining EPS trend over the long term. ShareSansar’s eleven-year review reported FY 2082/83 EPS of Rs. 7.59 and book value of Rs. 123.90. (sharesansar.com)
Butwal Power Company Limited (BPCL) — Overview & Key Metrics
Butwal Power Company Limited has a long history in Nepal’s power industry, having been incorporated in the 1960s and converted into a public company in 1993.
Its current generation business includes the 9.4 MW Andhikhola and 12 MW Jhimruk hydropower plants. The company also has investments in several hydropower projects and subsidiaries. (bpc.com.np)
Key metrics:
- Symbol: BPCL
- Direct operating generation: 21.4 MW
- Additional equity/project exposure: Several projects through subsidiaries and investments
- FY 2082/83 EPS: Rs. 9.84
- Book value: Rs. 210.87
- P/E: Around 68.6x on September 23, 2026 data
- Latest dividend: 6% cash for FY 2081/82 (Sun Securities)
Why it is notable:
BPCL is different from a single-project hydropower company because its business includes electricity generation, distribution, engineering and investments in other energy projects.
Its FY 2082/83 results produced EPS of Rs. 9.84. The company also reported a long-term development pipeline, including projects in the Marsyangdi Basin. (bpc.com.np)
However, investors should distinguish between existing operating capacity and future project capacity. A project under development does not contribute earnings in the same way as an already operating plant.
Sanima Mai Hydropower Limited (SHPC) — Overview & Key Metrics
Sanima Mai Hydropower Limited operates the 22 MW Mai Hydropower Project and 7 MW Mai Cascade Hydropower Project, giving it 29 MW of installed capacity. (maihydro.com)
Key metrics:
- Symbol: SHPC
- Installed capacity: 29 MW
- Mai Project: 22 MW
- Mai Cascade: 7 MW
- FY 2082/83 EPS: Rs. 7.85
- Book value: Rs. 137.50
- P/E: Around 65.4x based on September 11, 2026 market data
- Latest recorded dividend: 10% bonus + 0.5263% cash for FY 2080/81 (Sun Securities)
Why it is notable:
SHPC has an established operating asset base and investments in other hydropower companies.
However, FY 2082/83 also demonstrated why hydropower investors must consider physical project risk. The company’s Mai and Mai Cascade plants remained non-operational for several months after heavy rainfall damaged major headworks structures. The plants resumed operation after repair and replacement work. (Nepse Trading)
The company’s FY 2082/83 net profit was approximately Rs. 29.35 crore, down from approximately Rs. 32.04 crore in FY 2081/82. (NepView)
This makes SHPC an example of why an established hydropower company should still be examined for hydrology, infrastructure damage and generation performance.
Api Power Company Limited (API) — Overview & Key Metrics
Api Power Company Limited is another widely followed hydropower company listed on NEPSE.
Key metrics:
- Symbol: API
- Sector: Hydropower
- FY 2082/83 EPS: Rs. 15.06
- Book value: Rs. 119.51
- P/E: Around 22.2x based on September 24, 2026 data
- Latest dividend: 5% bonus + 0.26% cash = 5.26% total for FY 2081/82 (Merolagani)
Why it is notable:
API has a relatively diversified energy-development approach and has investments in additional projects and subsidiaries.
Its FY 2082/83 EPS of Rs. 15.06 is substantially above its previous-year level, while its P/E was around 22x in September 2026. (Merolagani)
The company has also maintained a history of bonus-share distributions, although its cash dividend has generally been relatively small. Its FY 2081/82 total dividend was 5.26%. (Sun Securities)
Investors should nevertheless examine API’s debt, project pipeline, investment commitments and future capital requirements rather than relying only on EPS.
Sahas Urja Limited (SAHAS) — Overview & Key Metrics
Sahas Urja Limited operates the 86 MW Solu Khola (Dudhkoshi) Hydroelectric Project in Solukhumbu. The project is a run-of-river plant and began commercial operation in 2023. (Sahasurja)
Key metrics:
- Symbol: SAHAS
- Installed capacity: 86 MW
- Project: Solu Khola (Dudhkoshi)
- Plant type: Run-of-river
- FY 2082/83 EPS: Rs. 29.72
- Book value: Rs. 180.58
- P/E: Around 23.5x based on September 23, 2026 data
- Latest dividend: 21% bonus + 1.11% cash = 22.11% total for FY 2081/82 (sharesansar.com)
Why it is notable:
SAHAS stands out for its large 86 MW operating project and strong FY 2082/83 earnings. The company reported net profit of approximately Rs. 135.92 crore for FY 2082/83, up 51.84% year over year, while EPS increased to Rs. 29.72. (sharesansar.com)
Its Solu Khola project has a 30-year PPA arrangement with NEA, providing an important contractual framework for electricity sales. (Sahasurja)
SAHAS also has a notable dividend history. It distributed 22.11% for FY 2081/82, comprising 21% bonus shares and 1.11% cash. (Sun Securities)
However, investors should also examine debt servicing, project cash flow, PPA conditions and the company’s future capital requirements.
Comparing the Hydropower Stocks
The following table provides a quick research-oriented comparison using FY 2082/83 figures:
| Company | Symbol | Capacity / Key Project | FY 2082/83 EPS | Latest Dividend | Approx. P/E* |
|---|---|---|---|---|---|
| Chilime Hydropower | CHCL | 22.1 MW | Rs. 7.59 | 12% | 46.7x |
| Butwal Power | BPCL | 21.4 MW direct generation + investments | Rs. 9.84 | 6% cash | 68.6x |
| Sanima Mai | SHPC | 29 MW | Rs. 7.85 | 10.53% | 65.4x |
| Api Power | API | Multiple energy projects | Rs. 15.06 | 5.26% | 22.2x |
| Sahas Urja | SAHAS | 86 MW | Rs. 29.72 | 22.11% | 23.5x |
*Approximate P/E based on available September 2026 market data and therefore subject to daily changes. Dividend figures are historical and do not indicate future distributions. (Sun Securities)
This table should be viewed as a starting point for research rather than a ranking. EPS, dividend and P/E should be considered alongside debt, cash flow, PPA, project age, generation and future projects.
Risks of Investing in Hydropower Stocks in Nepal
Hydropower can offer significant long-term opportunities, but it also carries company-specific and sector-wide risks.
Seasonal/Monsoon Dependency
Many hydropower projects in Nepal are run-of-river projects. Their electricity generation depends heavily on river flows.
During the dry season, lower water availability can reduce generation. During the monsoon, generation can increase but extreme rainfall can create physical damage.
Therefore, investors should look at both annual generation and seasonal generation patterns.
Flood and Infrastructure Damage Risk
Hydropower infrastructure can be exposed to:
- Floods
- Landslides
- Sedimentation
- Damage to headworks
- Tunnel problems
- Transmission-line damage
- Access-road damage
The 2026 experience of Sanima Mai illustrates this risk. Heavy rainfall damaged major headworks structures and temporarily stopped generation at its Mai and Mai Cascade projects. (Nepse Trading)
PPA Rate and Transmission Bottlenecks With NEA
A hydropower company’s revenue depends heavily on its PPA.
Investors should examine the agreed tariff, escalation mechanism, contracted energy and PPA duration.
Transmission infrastructure is another important issue. Even when a project is technically capable of generating electricity, insufficient transmission capacity can restrict evacuation and affect revenue.
NEA’s PPA framework provides different tariff structures for different project categories and seasons. (Nepal Electricity Authority)
Market-Wide Volatility
Hydropower shares can experience sharp price movements even when the underlying company has not changed significantly.
Factors influencing hydropower share prices include:
- NEPSE sentiment
- Interest rates
- Liquidity
- IPO and right-share announcements
- Dividend expectations
- Project news
- Floods and natural disasters
- Regulatory changes
- Investor speculation
The August 2026 flood-related market reaction demonstrated how quickly sector sentiment can change. (sharesansar.com)
How to Buy Hydropower Stocks on NEPSE
Buying hydropower shares requires the same basic market infrastructure used for other NEPSE-listed stocks.
Opening a DEMAT/Trading Account
Generally, an investor needs:
- A bank account
- A DEMAT account
- A MeroShare account
- A trading account with a licensed broker
- Access to the broker’s TMS platform
MeroShare is commonly used for IPO applications, portfolio information and related services, while the broker’s TMS is used for secondary-market trading.
Placing an Order Through Your Broker/TMS
After opening a trading account:
- Log in to your broker’s TMS.
- Search for the company’s symbol, such as CHCL, BPCL, SHPC, API or SAHAS.
- Select buy or sell.
- Enter the quantity.
- Enter your desired price.
- Review the order.
- Submit it.
Before placing an order, investors should check the latest LTP, market depth, financial reports and corporate announcements.
Frequently Asked Questions (FAQ)
Which hydropower stock has the highest dividend in NEPSE?
Dividend rankings change from year to year. For FY 2081/82, Sahas Urja announced a total dividend of 22.1053%, consisting of 21% bonus shares and 1.1053% cash dividend. (sharesansar.com)
However, a high historical dividend does not guarantee a high future dividend. Investors should check the latest dividend announcement and the company’s ability to generate sustainable cash flow.
Is hydropower a good long-term investment in Nepal?
Hydropower has long-term importance because Nepal has substantial water resources and the electricity industry continues to develop.
However, individual hydropower stocks have very different financial profiles. Investors should evaluate project age, generation, debt, PPA, transmission infrastructure, dividend history and valuation before making an investment decision.
What is the NEPSE Hydropower Index?
The NEPSE Hydropower Index, commonly called the Hydropower Sub-Index, tracks the performance of hydropower companies listed on Nepal Stock Exchange.
It is useful for understanding the overall direction of the hydropower sector, but it does not tell you whether an individual company is financially strong or fairly valued.
The index experienced significant volatility during 2026, including a sharp decline following flood-related concerns in August. (NepseData)
Are hydropower stocks risky during monsoon season?
Yes, monsoon season can create additional risks, particularly for run-of-river projects.
Higher river flows can support electricity generation, but extreme rainfall can cause floods and landslides that damage hydropower infrastructure.
The actual effect differs by project, location, design and infrastructure condition. Investors should therefore examine each company’s project exposure rather than assuming that every hydropower stock will react in the same way.
Which factors should I check before buying a hydropower share in Nepal?
A basic checklist includes:
- EPS
- Revenue and profit growth
- P/E ratio
- Book value
- Dividend history
- Debt-to-equity
- Interest expense
- Installed capacity
- Annual generation
- PPA tariff
- PPA duration
- Project age
- Transmission availability
- Future projects
- Cash flow
Looking at several years of financial statements is usually more informative than relying on one quarterly result.
Conclusion
Hydropower remains one of the most important and actively traded sectors of NEPSE in 2026. With hydropower companies representing a significant share of Nepal’s stock-market capitalization and accounting for a large portion of trading activity, the sector attracts both long-term investors and active traders. (Nepal Rastra Bank)
Companies such as CHCL, BPCL, SHPC, API and SAHAS provide different investment profiles based on project size, operating history, earnings, dividends, debt and future growth opportunities. The key is not simply finding a company with a high EPS or large hydropower capacity, but understanding how its PPA, generation, debt, cash flow, valuation and project risks affect shareholder returns.
If you are researching the best hydropower stocks in NEPSE to trade or watch in 2026, use this article as a starting point and verify the latest financial statements, corporate announcements, LTP, EPS, P/E and dividend information before making any investment decision.
Final disclaimer: This article is for educational purposes only and should not be considered financial or investment advice. Past performance, dividends or earnings do not guarantee future returns.