Torrent Power surges 7%, nears record high on robust performance in Q2

Shares of Torrent Power surged 7 per cent to Rs 535 on the BSE in Thursday's intra-day trade, in an otherwise weak market, after the company reported a robust performance for the quarter ended September 2021 (Q2FY22).

The stock of the electric utilities company was trading close to its record high level of Rs 544.80, touched on October 12, 2021. In comparison, the S&P BSE Sensex was down 0.96 per cent at 60,557 points. Trading volumes on the counter more-than-doubled with a combined 3.1 million shares having changed hands on the NSE and BSE till the time of writing of this report.

For Q2FY22, Torrent Power's revenue from operations grew 17 per cent year-on-year (YoY) at Rs 3,648 crore. Earnings before interest, tax, depreciation and amortization (Ebitda) were up 30 per cent YoY at Rs 974 crore, while margins improved 279 basis points to 26.7 per cent during the quarter. Profit after tax jumped 82 per cent to Rs 369 crore from Rs 202 crore in the year-ago quarter.

The major reasons for improvement in the performance for the quarter on a YoY basis are the significant reduction in transmission & distribution (T&D) losses in the company's distribution franchisee business and significant increase in electricity demand mainly in commercial and industrial customers during current quarter in the company's distribution franchisee business.

The significant reduction in provision for doubtful debts in Distribution Franchisee business, which was severely impacted the comparative quarter of last year due to Covid 19 pandemic; increase in contribution from renewables generation, which was impacted in comparative quarter of last year due to abnormally lower wind speed and decrease in interest cost, both due to lower debt and reduction in interest rates were also led to improve performance of the company during the quarter.

Torrent Power, the Rs 12,173 crore integrated power utility of the Rs 20,500 crore Torrent Group, is one of the largest companies in the country's power sector with presence across the entire power value chain – generation, transmission and distribution.

The company enjoys a strong balance sheet position with some of the best financial ratios amongst private players in the power sector with debt: equity ratio of 0.69 as at Q2FY22 and net debt to EBITDA ratio of 1.98 as on March 31, 2021.