Another low voltage quarter for electricity producers
The financial results of electricity producers in the March quarter will be the re-run of a familiar sob story
The financial results of electricity producers in the March quarter will be the re-run of a familiar sob story.
While private utilities are likely to report some incremental improvements such as higher generation, problems of low realization and high finance costs will continue to haunt them.
State-controlled NTPC Ltd will register better utilization and availability, helping the company report a healthy financial performance.
Aided by new capacities and higher electricity generation, Adani Power Ltd will post strong revenue. But it is unlikely that the company will come out of losses as fixed power purchasing agreements and high interest costs continue to impact profitability.
For Tata Power Co. Ltd, it may be a muted quarter. Despite higher production from Mundra and Maithon plants, the company’s revenue growth can be weighed down by low generation in Mumbai licence area, Karvy Stock Broking Ltd said in a note.
Low realizations at coal ventures and high interest costs can curtail profit expansion at Tata Power, the broking firm says.
JSW Energy Ltd is likely to do no better. Some of its plants ran at lower utilization levels. Add to this weak merchant power rates, brokerages are forecasting a substantial fall in the company’s profits.
CESC Ltd is the outlier in this group. Despite muted growth in electricity sale volumes, the company’s revenue and profits are expected to get a boost from tariff revision on a sequential basis.
The scenario is slightly different for hydropower producers such as NHPC Ltd and Jaiprakash Power Ventures Ltd.
These companies are not that financially troubled. But plant shutdowns, low electricity generation and poor realizations are expected to impact their financial performance.
“We expect NHPC’s sales volume to decline 1% y-o-y (year-on-year) while revenue is likely to increase 20% y-o-y due to increased tariff," ICICI Securities Ltd said in a note. “JP Hydro’s overall generation is likely to increase 81% y-o-y driven by full commissioning of 500 megawatts Bina plant. However, we expect a loss of ₹ 49.4 crore due to increased fixed expenses and backdown at Bina power plant."
Overall, investors are unlikely to be enthused by the performance of electricity generators in the March quarter. All stakeholders, including company managements, are waiting for the new government to fix the structural problems of the sector.
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