Hydropower IPOs in Nepal: why they oversubscribe and whether the rush is worth it

A friend applied for the Kalinchowk Hydropower IPO in Chaitra with the minimum Rs 1,000 blocked through ASBA, mostly because a coworker said "everyone's applying." He didn't get allotted. Two weeks later he watched the stock open at Rs 300, three times the Rs 100 issue price, and spent the rest of the month grumbling about the 83,000 people who did win the lottery.

That single data point is why hydropower IPOs generate the most reflexive FOMO on NEPSE. The listing-day headlines are real. So is the fact that most applicants get nothing, and that a meaningful share of already-listed hydropower companies have never paid their shareholders a rupee.

What "oversubscribed 38 times" actually means

An IPO is oversubscribed when applications for units exceed the units on offer. Kalinchowk Hydropower's general-public tranche of 6,84,750 units drew applications for 2,62,52,800 units from 22,27,493 applicants, which works out to 38.33 times the units available. That's not 38 times as many people as shares; it's 38 times as many units requested as units offered, and the two numbers move differently depending on how many units each applicant applies for.

Four recent issues show the spread:

There's no stable "normal" multiple. A smaller or better-marketed project (Kalinchowk, a BOOT-model plant in Dolakha) pulled a bigger crowd than a larger issue (Bikash) a few months earlier. Company size, location name recognition, and how much retail attention NEPSE's Telegram and Facebook groups gave the issue all move the number more than the project's actual fundamentals do.

Why the CDSC lottery isn't about how much you apply for

Every hydropower IPO in Nepal runs the same allotment mechanism once oversubscribed: a computerized lottery through CDSC. The key detail people miss is that applying for more units doesn't buy you better odds. Each applicant gets exactly one lottery entry, whether they applied for the minimum 10 units or the maximum allowed. If your entry is drawn, you receive a guaranteed minimum of 10 units; only in a mildly oversubscribed issue does the lottery stretch further than that guaranteed minimum.

The practical odds swing hard with the oversubscription ratio:

That's roughly a 4.5x difference in your odds of winning, purely a function of how many other people applied that particular season, not anything about the company itself. For the mechanics of the lottery itself, minimum-unit rules, and why the multi-demat trick that used to game these odds stopped working, see the IPO allotment lottery post. The blocked-amount process through ASBA, and what happens to your money if you lose, is covered in the ASBA guide.

The quota carve-outs shrink the pool before you even compete

The "general public" tranche you're actually applying against is smaller than the headline issue size, because several reserved slices come out first. Kalinchowk Hydropower's breakdown illustrates it:

After those carve-outs, only 6,84,750 units were left in the general-public tranche that most retail applicants were actually competing over. The exact percentages differ by company and by project type (a BOOT-model, project-affected-community plant like Kalinchowk reserves differently than a straightforward run-of-river issue), so treat this as a pattern to check per prospectus rather than a fixed rule. Migrant workers applying through the foreign-employment quota use a separate remittance-account setup; see the foreign-employment IPO quota post if that's your route in.

The listing-day pop, and how fast it can fade

This is the part that drives the FOMO. On its NEPSE debut, Kalinchowk Hydropower opened at Rs 300 against its Rs 100 IPO price, a 200% first-day gain. Solu Hydropower's opening range ran Rs 100 to Rs 300. Bhujung Hydropower's opening band spanned roughly Rs 90 to Rs 270. Bikash Hydropower, which listed in August 2025, opened between roughly Rs 97 and Rs 292 and was trading near Rs 567 about a year later, a further climb well past its own listing-day range.

These are genuinely large numbers, and they're why hydropower IPOs are the ones people actually talk about at tea shops. What the headlines skip is that a listing-day price is not a return you've locked in unless you actually sell that day, and analysts covering the sector routinely note that early excitement fades once the allotment euphoria passes. Selling on listing day also means paying the full round-trip trading cost and short-holding capital gains rate; the NEPSE trading cost post and the capital gains tax post both apply the moment you cash out.

The dividend record most applicants never check

Here's the number that should temper the rush: according to an investigation by the Centre for Investigative Journalism Nepal, only 35 of 91 listed hydropower companies have ever distributed a dividend to shareholders. That means 56 have not, and some of those are actively losing value for the shareholders still holding them.

Two contrasting examples from that investigation:

The gap between the best and worst performers in the same sector is enormous. A hydropower IPO allotment is a lottery win on day one; whether the company behind it ever pays you anything is a completely separate question that depends on the individual project, not the sector label.

Why the underlying projects carry real construction risk

Part of the reason payouts lag is that hydropower construction in Nepal has a documented history of running over time and over budget. Upper Tamakoshi (456 MW), Nepal's largest domestically built plant, was originally scheduled for mid-2016 completion; the 2015 earthquakes and slow contractor progress pushed the cost from an initial Rs 35 billion to roughly Rs 53 billion, and financing interest alone added another Rs 32 billion, taking the total closer to Rs 85 billion before commissioning. Not every project hits earthquake-level delays, but cost and schedule overruns are common enough in the sector that a newly listed, still-under-construction issuer carries meaningfully more uncertainty than an already-operating one.

Most projects are financed on a debt-heavy structure, commonly cited around 70% debt to 30% equity, which means early cash flow tends to service the loan before it reaches shareholders as a dividend. NEA's power purchase rate for run-of-river projects is commonly cited around Rs 4.80 per unit in the wet season and Rs 8.40 in the dry season, with a modest annual escalation over the first several years, though the exact figures vary by project's specific PPA and are worth confirming against the individual company's own agreement rather than treating as a fixed industry number.

Why hydropower dominates NEPSE's IPO calendar

Part of the answer is simple supply: as of early 2026, roughly 91 hydropower companies were already listed, more than a third of all NEPSE-listed firms, and dozens more sit in SEBON's approval pipeline. Hydropower stocks account for a disproportionate 45% of total NEPSE trading volume against a smaller share of total market capitalization, evidence that retail trading activity concentrates here far more than fundamentals alone would predict. A low Rs 100 face value makes each unit cheap to apply for at scale, and the "Nepal's hydropower potential" narrative gives the sector an emotional pull that a cement or hotel IPO doesn't get. For the sector's broader risk profile against banking, insurance, and microfinance, see the NEPSE sectors post; for whether NEPSE overall looks expensive right now, see the NEPSE valuation post.

What you actually need to know

1. Oversubscription and your odds are two different numbers, and both swing hard. Recent hydropower IPOs ranged from under 4 times to over 38 times oversubscribed, with actual allotment odds moving inversely, from roughly 14% down to about 3%.
2. A listing-day pop is not a guaranteed return. Kalinchowk's 200% opening gain is real, but it's a snapshot, not money in hand until you sell, and the trading cost and capital gains tax both apply the moment you do.
3. Check the dividend record before you decide to hold. Only 35 of 91 listed hydropower companies have ever paid a dividend. Applying for the lottery is nearly free; staying invested in the company afterward is a separate decision that deserves the same scrutiny you'd give any other stock.

Applied for a hydropower IPO and not sure how to log the allotment, the refund, or the eventual sale correctly? Email parjanya57@gmail.com with the prospectus and I'll walk through the numbers with you.

This post is part of the Nepal Money Basics guide — the investing section.