JSW Energy Limited, part of the diversified JSW Group, on Thursday reported a 19% year-on-year rise in Q1FY17 net profit to Rs 367 crore, broadly in line with analysts’ estimates.
The top line for the quarter increased 15% y-o-y to Rs 2,492 crore helped by power generated from hydro units acquired in Q2FY16.
However, revenues came in a shade below expectations thanks to lower realisations, year-on-year, during the quarter under review, the company said in a release.
Earnings before interest, taxes, depreciation and amortization (EBITDA) margins, for the June quarter, increased to 45%, 800 basis points over Q1FY16, helped by long-term power purchase agreements (PPAs). The JSW Energy stock closed 3.8% lower on the Bombay Stock Exchange. The results were announced after the close of market hours.
In a release, the Sajjan Jindal-led company said net generation increased 48% year-on-year in Q1FY17 due to additonal capacity and better operational performance in Ratnagiri. However, there were maintenance shutdowns at the plants in Vijayanagar and in Barmer in June.
The company further said it expects weak merchant power prices and the recent hardening of international coal prices to exert a pressure on margins in future. However, it said it also expects the government’s spending on infrastructure and various development projects to spur the investment cycle, and consequently, demand for energy.
With almost two-thirds of JSW Energy’s capacities tied up via PPAs, Harshvardhan Dole, analyst at IIFL Equities said the company’s focus is to tie up more power through long-term PPAs.
“The advantage JSW Energy has is the location of the Karnataka plant where the demand is high and supply is relatively low,” he pointed out. He added the firm had participated in a medium-term tender and would probably be able to sell 750 MW out of the 850 MW capacity. They are taking the right steps to lock in their power on a long-term basis. In Maharashtra and Rajasthan, they have a PPA in place already,” he said.
In an update, the company added it was withdrawing from the acquisition process to claim a majority stake in Monnet Power Company Limited (MPCL) as MPCL’s lenders had already rejected its proposal.