Torrent Power leaps 8%, nears 52-week high on 300 MW solar, wind project

The company has received Letter of Award for Grid Connected Wind Solar hybrid project worth Rs 3,650 crore

Shares of Torrent Power surged 7.6 per cent to Rs 1,249.25 per share on the BSE in Monday's intraday trade, in an otherwise volatile market, on the back of Rs 3,650-crore project win.

At 11:05 AM, shares of the company were ruling 5 per cent higher at Rs 1,219 per share as against 0.07-per cent dip in the benchmark S&P BSE Sensex. The stock's intraday high was close to its 52-week high level of Rs 1,288.45, hit on March 11, 2024. 

On Friday, Torrent Power said that the company has received Letter of Award from Torrent Power Limited-Distribution Unit for setting up of 300 MW (RE Power) Grid Connected Wind Solar hybrid project.

 

"The project shall be commissioned within 24 months from Power Purchase Agreement (PPA). Its contract period shall be 25 years from the Commissioning of the project," it said in an exchange filing after market hours. 

The annual capacity utilisation factor (CUF) shall not be less than 50 per cent for any of the year during the term of the PPA and rated power capacity of wind and solar shall be in the ratio of 2:1. For meeting the 50 per cent CUF requirement, the company plans to install 480 MW of wind and solar capacity against contracted capacity of 300 MW, it added.

Torrent Power is one of the leading brands in the Indian power sector, promoted by the Rs 21,500 crore Torrent Group. It is an integrated power utility and is one of the largest private sector players in India having interests in power generation, transmission, distribution, and manufacturing and supply of power cables.

Torrent Power has a portfolio of coal based, gas based and renewable power plants with an aggregate generation capacity of 3,879 MW. The company distributes power to over 3.8 million customers annually in its distribution areas of Ahmedabad, Gandhinagar, Surat and Dahej SEZ and Dholera SIR (Gujarat), in Bhiwandi, Shil, Mumbra and Kalwa (Maharashtra), Agra (Uttar Pradesh), and in Union Territory of Dadra & Nagar Haveli, Daman and Diu.

Earlier, on March 7, Torrent said that it has received Letter of Award from Maharashtra State Electricity Distribution Co. Limited for supply of 306 MW Solar power under Mukhya Mantri Saur Krushi Vahini Yojana 2.0 scheme for feeder level solarisation under PM KUSUM Scheme.

"The project shall be commissioned within 18 months from the Letter of Award at an estimated cost of Rs 1,540 crore. The tariff for the project is Rs 3.10/kWh for the period of 25 years," it said.

The Government of Maharashtra aims to ensure stable daytime electricity to agriculture consumers through decentralised solar power projects. To enable the development of the MSKVY 2.0 scheme, it has taken a cluster wise approach whereby revenue land and certain approvals are already obtained by MSAPL directly into the project SPVs. 

Torrent shall acquire 100 per cent of the equity shares of the Project SPV and will get the Central Finance Assistance (CFA) from Central govrnment for eligible capacity as per the terms of

the PM KUSUM Scheme, it said in a statement.

Meanwhile, financially, Torrent Power posted a flat revenue of Rs 6,366 crore, down 1 per cent year-on-year (Y-o-Y). This led to a 47 per cent Y-o-Y decline in profit before tax due to lower gains from gas trading and merchant power sales compared to the corresponding period last year. 

Higher wind capacity availability, an increase in ROE on capitalisation of capex, solar and O&M incentives, however, lifted renewables and distribution segment Ebitda, even though the gains were offset by higher depreciation and finance costs. This led to a 46 per cent Y-o-Y decline in PAT to Rs 374 crore.

"We, thus, reduce the FY24E/FY25E/FY26E PAT estimates by 4.3 per cent/2.5 per cent/1.2 per cent, respectively, as softening gas prices limit the erstwhile opportunistic advantage from LNG trading. We exercise caution over the execution risks in renewable capacity additions, current high valuations, and the recent run-up in the price of the stock," said analysts at Geojit Financial Services. 

We value the stock at 2.9X P/B on FY26BVPS and maintain 'SELL' rating with a target price of Rs 1,038.