Most of us don’t even bother with mutual fund IPOs. They feel like dead weight. The market price is usually below the par value of NRs. 10, and so we dismiss them without a second thought.

But here’s what we ignore: The Net Asset Value (NAV).

That’s the real value of a mutual fund i.e. its total assets (stocks, fixed deposits, debentures, cash) divided by the number of units. If a fund has an NAV of NRs. 12 and it matures today, you’d get NRs. 12 per unit. Simple math.

Because maturity is years away, and underlying assets could drop in value, mutual funds trade at a discount to NAV. This discount acts as a buffer, a margin of safety, totally rational yet we still won’t buy closed ended mutual funds in the market.

Yet lets change this scenario to a stock listed in NEPSE, the all hyped up NRN Infrastructure and Development Limited (NRN).

The business model? Honestly, not that different from a mutual fund. NRN collects capital from investors and deploys it in various companies. They are mostly pre-IPO hydropower projects, expecting returns via capital appreciation or dividends.

The difference? Mutual funds focus on listed stocks in the secondary market. NRN invests before companies go public. But in the end, both are holding assets hoping to sell them for more later. Maybe one earns more another earns less but that doesn’t matter, after all its just Math’s and common sense here.

So here’s the question: what’s the actual worth of NRN’s holdings if sold today?

Let’s go all out. Let’s give NRN the most generous, inflated assumptions possible:

  • All shares are fully tradable i.e. no lock-in period anywhere on all of their holding stocks.
  • Zero taxes. Zero transaction costs. Zero operating expenses.
  • Promoter shares sell at the same price as ordinary shares, which we know doesn’t happen.
  • No discount rate, i.e., they will sell it today itself so no discounting the cash flows.

They sell everything at the all-time high prices or last traded price (LTP) and in some assumptions even beyond the market price which you can see in the table below : 

And even then? The total realizable value of NRN’s assets is around NRs. 707 crore. Meanwhile, NRN’s current market cap? NRs. 2213 Cr. Its grossly overvalued by 213% even with every stretched assumption.

Let’s break it down with a relatable analogy of mutual funds.

To put things into perspective, imagine a mutual fund with a Net Asset Value (NAV) of NRs. 10. That’s what it’s actually worth per unit based on the assets it holds. Now picture someone willingly paying NRs. 31.30 for it which is more than three times its value.

Sounds ridiculous, right?

Especially when you realize most of us won’t even pay NRs. 9 for a mutual fund with an NAV of NRs. 10. We skip it because it’s “not worth it.” . But somehow, when it comes to stocks like NRN, the logic goes out the window and we’re happy to pay three times the realizable value.

Or, even more absurdly paying NRs. 3,120 for an envelope labeled “Contains NRs. 1,000.”

Now ask yourself: would anyone do that?

Even a fourth grader wouldn’t.

Someone who’s just learned division and subtraction in class 4 would call out the math. They’d say, “Wait… why are you paying more than triple for something worth much less?” It’s that basic. But the stock market? It’s not always ruled by logic. It’s ruled by herd behavior, hype, and often, blind trust in a ticker without checking what’s underneath. And this isn’t the first time something like this has happened. It won’t be the last either. The market is full of overvalued stocks that defy basic logic and undervalued ones quietly waiting to be noticed.

The math isn’t hidden. You just need to look. We’re here to shine a light on that. This time, we’ve looked at a stock that’s priced far beyond reason. Next time? We’ll talk about one that’s priced way below what it’s worth.

Stay curious. Stay rational. Stay tuned.

Keywords: NRN NRN Infrastructure and Development Limited