Results announced by Tata Power were below consensus estimates. And this sentiment was reflected in the share price which closed at Rs 1,423.20 on the BSE, down by 1.19% from its previous close. The Bloomberg consensus estimate was a net profit of Rs 199 crore and revenues of Rs 1,750 crore for the quarter ended December 2009.
The company managed a turnover of Rs 1,566.51 crore, sharply down from the Rs 1,776.87 crore in the corresponding quarter last year. Similarly, the net profit of Rs 147.89 crore was well below estimates. However, net earnings recorded a 28% growth in over the Rs 115.08 crore recorded during the same period of the last year. Analysts reckon that it is not the lower revenues that were of concern, as the fuel costs were lower and they had to be passed through as the power companies work on a cost plus basis and therefore the unit realisation was lower this reflects in the revenues. It is the flat power generation that is more of a concern, the company generated around 3,714 million units in the three months as compared to 3,711 million units in the same period of the previous year. And, this is despite the company adding around 340 mega watts in the quarter, say analysts.
Moreover, the Trombay unit 8 at Mumbai had seen some shutdowns. So the volume offtake was lower. This unit caters to the merchant power supply and here as well the realisations were expected to be a lower by a rupee per unit as against the estimated Rs 5.60 per unit in the earlier quarter and around Rs 7 per unit in the previous year. This has taken a toll on the current earnings. However, most analysts see this as a temporary blip and the company would be in a position to generate better numbers in the years ahead. Analysts are betting on the coal business to generate stronger revenues in the days to come as there is a significant shortage being built up in the region. Tata Power owns 30% in Indonesian coal mines and at the moment contributes 25% of the consolidated revenues. The company also intends to build in 5.8 giga watts by 2012 and this would see the volume growth come in and build in growth.