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    Tata Power sees profit growth for 8th straight quarter; targets 15 GW capacity by 2025

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    Tata Power sees profit growth for 8th straight quarter; targets 15 GW capacity by 2025

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    Tata Power is in focus on the back of their earnings. Revenue is in line with estimates but margin has declined more than expected owing to over 60 percent rise in cost of power. In an interview with CNBC-TV18, Praveer Sinha, MD & CEO of Tata Power, discussed the current coal crunch and the resulting rise in power cost in its aftermath along with the company's performance.

    Tata Power, on Thursday, posted a 36 percent jump in its consolidated net profit at Rs 506 crore for September-ended 2021 on the back of higher revenues. The net profit of the company in the quarter ended September 30, 2020 was Rs 371 crore, a BSE filing stated.
    Total income stood at Rs 10,187.33 crore in the quarter as against Rs 8,441.60 crore in the same period a year ago. Consolidated profit after tax was up 36 percent due to savings in finance cost and better performance in renewables business, a company statement said.
    In an interview with CNBC-TV18, Praveer Sinha, MD & CEO of Tata Power, discussed the current coal crunch and the resulting rise in power cost in its aftermath along with the company's performance.
    On cost of power, he said, “The cost of power has gone up because for us imported coal prices went up. But what also has happened is that the profitability of coal companies has improved. Since that does not get covered in the EBITDA margin, but comes directly into our profit, you see that our profits have increased by 36 percent. So that is the reason that there is a mismatch in the operating profit and the EBITDA. But otherwise, I think the company has done very well.”
    He added, “All our existing businesses, renewables, distribution, and our existing generation and transmission businesses have done exceedingly well. This is the eighth consecutive quarter where we have shown growth in our profit. So, I think directionally, the company is doing the right things, and sustained operations and sustained improvement in performance is getting reflected in profits and returns.”
    Tata Power aims to scale up its renewable business towards its 2030 target. Clean energy currently makes up for 32 percent of Tata Power’s portfolio, which is expected to touch 80 percent by 2030, Sinha said. Tata Power is committed and aligned with the government's National Electric Mobility Mission Plan (NEMMP) 2020 and FAME II policy which are focused on transforming the e-mobility space of the country.
    Sinha said, “In this quarter, we added nearly 250 megawatts of capacity and we are 3,000 megawatts right now. We also won 580 megawatts in this quarter. So, we have in our portfolio, nearly 4,600 megawatts, which are already operating are under implementation. So, it is a good improvement that we have seen.”
    “We expect that by 2025-2026, we will be about 15 gigawatts, where we will add 2 gigawatts capacity every year. So that is the target that we have set for ourselves and we feel that going forward, it will not just be pure solar or pure wind, but it will be hybrid solutions. I think the renewable business will not only be at the utility scale, but also at the distributed scale. More and more industries and consumers, we are finding, are moving towards having green power for running their operations. The traction that we are seeing is phenomenal.”
    On generation, Sinha said, “In the last quarter, we virtually did not generate anything from our Mundra plant and nearly Rs 1,500-1,600 crore of generation money comes out of Mundra and the plant was operating just one unit and that also was closed in mid of September. So, we virtually lost one full quarter of generation from Mundra. This has picked up since October 13, the plant is operating with three units and supplying to some of the states like Gujarat, Rajasthan and Punjab. This is expected to continue till the end December.”
    He further added, “We also feel that the profit margins will improve in the generation business because of Mundra becoming cost reflective to that extent. Our coal business has done exceedingly well in the last quarter. Unfortunately, that does not get covered in our operating profit and the EBITDA that comes in the profit after tax, and that is why you see that PAT has increased by 36 percent and corresponding increase is not being seen in the EBITDA.”
    (With text inputs from PTI)
    For full management commentary, watch the video.
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