Tata Power sees profit growth for 8th consecutive quarter; Targets 15 GW capacity by 2025

Tata Power on Thursday recorded a 36% increase in its consolidated net profit to Rs 506 crore for the end of September 2021 on the back of higher revenues. The company’s net profit in the quarter ended September 30, 2020 was Rs 371 crore, according to a BSE filing.

Total revenue stood at Rs 10,187.33 crore during the quarter compared to Rs 8,441.60 crore in the same period a year ago. Consolidated profit after tax rose 36% due to financial cost savings and better performance in the renewable energy sector, according to a company statement.

In an interview with CNBC-TV18, Praveer Sinha, MD and CEO of Tata Power, discussed the current coal crisis and the resulting increase in the cost of electricity, as well as the company’s performance .

On the cost of electricity, he said, “The cost of electricity has increased because for us the prices of imported coal have increased. But what has also happened is that the profitability of the coal companies has improved. Since this is not covered in the EBITDA margin, but goes directly into our earnings, you see that our earnings have increased by 36%. So that’s why there’s a lag between operating profit and EBITDA. But otherwise, I think the company did very well.

He added: “All of our existing businesses, renewables, distribution and our existing generation and transmission businesses have performed extremely well. This is the eighth consecutive quarter in which we have posted growth in our earnings. So I think directionally the company is doing the right things, and the sustained operations and sustained improvement in performance are reflected in earnings and returns.

Tata Power aims to grow its renewable business towards its 2030 target. Clean energy currently accounts for 32% of Tata Power’s portfolio, which is expected to reach 80% by 2030, Sinha said. Tata Power is committed to and aligned with the National Electric Mobility Mission Plan (NEMMP) 2020 and the government’s FAME II policy, which aim to transform the country’s electric mobility space.

Sinha said, “During this quarter, we added almost 250 megawatts of capacity and we are currently at 3,000 megawatts. We also gained 580 megawatts during this quarter. Thus, we have in our portfolio, nearly 4,600 megawatts, which are already in operation and being implemented. So that’s a good improvement we’ve seen.

“We project that by 2025-2026 we will be at around 15 gigawatts, where we will add 2 gigawatts of capacity every year. So that’s the goal we’ve set ourselves and we believe that in the future it’s not just going to be pure solar or pure wind, but it’s going to be hybrid solutions. I think the renewable business will not only be at the utility scale, but also at the distributed scale. We are seeing more and more industries and consumers moving towards using green energy to run their operations. The traction we’re seeing is phenomenal.

On generation, Sinha said, “During the last quarter, we have generated next to nothing from our Mundra plant and almost Rs 1,500-1,600 crore of generation money is coming out of Mundra and l The factory only operated one unit and that was also closed in mid-September. Thus, we have practically lost a quarter generation of Mundra. This has resumed since October 13, the factory is operating with three units and supplies some states like Gujarat, Rajasthan and Punjab. This should continue until the end of December.

He further added: “We also believe that profit margins will improve in the production sector as Mundra will become a reflection of costs to that extent. Our coal business performed extremely well during the last quarter. Unfortunately, that’s not covered by our operating profit and EBITDA which goes into profit after tax, and that’s why you see that the PAT has increased by 36% and the corresponding increase is not not visible in EBITDA.

(With text entries from PTI)

For a full executive commentary, watch the video.

(Edited by : Dipikka Ghosh)