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Adani Power Ltd., a part of Adani Group, posted its Q2 results for FY22. The company generated a total comprehensive net loss of Rs.239 crores compared to a mammoth profit of Rs. 2,216 last year for the corresponding quarter. According to the company statement, widening peak deficit along with fuel supply constraints resulted in a sharp rise in merchant and short-term tariffs that affected the company’s earnings. Additionally, the large variation in the year-on-year (YoY) figures is also due to the high base set by the higher contribution of one-time revenue items to post-tax profit in Q2 of the previous year.

Consolidated revenue declined nearly 57% YoY from Rs. 8,792.28 crores to Rs. 5,571.76 crores in Q2 FY22. The figure stood at Rs. 7213.21 in Q1 FY22. Revenue from operations for Adani Power came at Rs. 5,183.66 crores in Q2 FY22 against Rs. 7,749.21 crores reported in the same quarter in the previous year, again impacted by a higher base due to higher one-time regulatory revenue of Rs 3,233 crore in Q2 of the previous year. 

The consolidated EBITDA came down to Rs. 1,551 crore from Rs. 5,086 crore last year, courtesy, lower one-time income, and forex movements. 

The script reacting to the abysmal results declined nearly 3.3%, in line with the indices that declined during the trading session.

Highlights 

  • Adani Power aims to be in the top five companies in India for ESG benchmarking of the Electric Utility sector by 2023.
  • The company has become a signatory to India Business and Biodiversity Initiative (IBBI) to conduct business aiming at no net loss to biodiversity.  
  • Adani Power Ltd. (APL) is committing to building a green supply chain by ESG integration in business with critical suppliers. 
  • Adani Power looks to become a Single-use Plastic Free (SuPF)-certified company for 100% of operations by 2023-24.

Misses

  • The company reported a net loss of Rs. 240 crores against a Rs.2216 crores YoY. 
  • Revenue from operations declined by 33% from Rs 7,749 crores to Rs 5,183 crore.
  • Total income crashed 59% to Rs. 5,571.76 crores from Rs. 8,792.28 crores on a yearly basis.
  • Consolidated EBITDA figures declined to Rs. 1,551 crore from Rs. 5,086 crore over the last year for the corresponding quarter.  

Adani Power in the news

  • Adani Power has kept the public interest with an exciting churn of news. 
  • Adani power aims to invest over $50-$70Bn in the renewable energy value chain.
  • Adani Power stock has spurted over 30% on the indices on re- demand of pre-pandemic level power and electricity. 
  • The company became a successful bidder for commercial mining of the Gondkhari coal block in Maharashtra. 
  • Adani Power picks up a 49% stake in Odisha Power Generation for Rs1019 crores. 

Management commentary

Mr. Anil Sardana, Managing Director, Adani Power Limited, commented that thermal power would continue to be the balancing force between renewables and grid demand. He further highlighted that Adani Power, with a reliable and cost-effective power supply, will enable the fruits of development to be delivered to the nation’s farthest reaches and its disadvantaged sections. 

The director also took a cue from Atmanirbhar Bharat, indicating that it will support growth in the manufacturing sector through a competitive and reliable power supply. 

Other things to know

  • Adani Power (APL), India’s largest private thermal power producer, has an installed thermal power capacity of 12,410 MW spread across six power plants in Gujarat, Maharashtra, Karnataka Rajasthan, and Chhattisgarh. It also operates a 40 MW solar power plant in Gujarat.
  • The company has a market capitalization of nearly ~ 40,000 crores. Negative/ low Net cash flow and interest coverage ratio has remained a cause of worry for the power sector major. Shareholding patterns reveal Promoters owning nearly 75% shares.
  • The company stands committed to serving the growing demand for electricity/power besides ensuring the betterment of communities around it through its energy mix portfolios and partnerships in natural gas and solar energy.
  • Adani Power stock has a 5 year CAGR of 30% and the stock trades at P/E of 18.8, not far from the industry average of 19.56. It currently has an EPS of 5.78 and a ROE of 12.96%.
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