Tata Power Q2 profit up 36% on lower finance costs, growing green energy biz

Tata Power Ltd has reported a 36% increase in year-on-year net profit for the second quarter ended September, helped in lower finance costs and an uptick in its renewable energy business.

Consolidated profit after tax rose to Rs 506 crore for the July-September period from Rs 371 crore a year earlier, the private-sector electricity producer said. Consolidated revenue went up by 13% to Rs 9,502 crore from 8,428 crore.

The Tata Group company said its consolidated earnings before interest, tax, depreciation and amortisation fell to Rs 1,732 crore from Rs 2,276 crore in the corresponding quarter last year.

EBITDA fell mainly due to higher losses at its Mundra power project on account of higher coal prices, but this was offset at the net profit level by earnings at coal mines.

The bottom line was boosted also by an 11% drop in finance costs to Rs 946 crore from Rs 1,065 crore.

Tata Power also said that while the cost of fuel, mainly coal, was up 17.2%, on a year-on-year basis, the cost of power purchased was up 61%, more than offsetting the former. 

Tata Power’s numbers come as the country is facing an acute shortage of coal, and rising price of spot power. Both the government and industry say that the shortage is likely to persist at least for the next six months.

Shares of Tata Power closed 2.7% lower at Rs 218.05 apiece on the BSE on Thursday. The shares have lost almost a fifth of their value since touching a one-year high on October 19. However, the shares are still up fourfold over the past year.

Tata Power Q2: Other highlights

1) Revenue from the transmission and distribution segment jumped 48% year-on-year to Rs 6,787.4 crore.

2) Revenue from the power generation segment fell 36% YoY to Rs 2,216.9 crore.

3) Revenue from the renewable energy segment rose 35% to Rs 1,494.9 crore from Rs 1,105.6 crore a year ago.

Tata Power management commentary

The company said that its strong performance was thanks partly to its transmission and distribution segment, which benefitted from the surge in domestic power demand.

Its power generation business suffered due to reduced run time as thermal power stations across the country faced a coal shortage during the quarter.

Tata Power chief executive officer and managing director Praveer Sinha said the company aims to scale up its renewable energy business towards its 2030 target. “Clean energy currently makes up 32% of Tata Power's portfolio. This is expected to touch 80% by 2030,” Sinha said. 

Sinha said all business divisions and subsidiaries reported strong results and that consolidated financial performance was “exceptionally strong” on the back of robust underlying business performance. 

“Our focus continues to remain towards the expansion of our renewable and distribution businesses and go green strategy in our existing generation business,” he added.