Renewables help Tata Power continue its profit growth streak for 23 quarters

Mint

4 days ago

Profit from Tata Power Co. Ltd's renewable businesses outgrew quarterly earnings from coal-based power generation and distribution for the first time, helping the company report higher profits for 23 straight quarters.
Tata Power expects the renewables-led boom in its financials to continue, especially in its rooftop solar and solar cell and panel manufacturing businesses, said managing director and chief executive officer Praveer Sinha.
'The (momentum in) manufacturing will sustain and improve in the coming quarters because now we are getting better yields and better efficiency. The rooftop solar business will improve a lot,' Sinha said in an interview on Friday.
Tata Power is the market leader in making rooftop solar units. Its renewable energy business includes 4.6 gigawatt of solar and 1 GW of wind power-generation assets. The company also provides engineering, procurement and construction (EPC) services for solar power plants and has manufacturing units for solar cells and modules at Tirunelveli in Tamil Nadu and Bengaluru. It also operates electric vehicle charging stations.
Tata Power's performance in April-June was boosted by the commissioning of 652 megawatt of solar EPC projects, which was the highest for the company in a quarter. Of this, 560 MW was for third-party contracts, and the rest for in-house consumption.
Sinha expects EPC work for in-house power plants to outpace third-party projects by the second half of this financial year, with 1,600 MW of captive solar plants targeted for commissioning.
Tata Power reported a consolidated profit of ₹ 1,060 crore for the first quarter, 8% more than in the same period last year. Revenue was 4% higher at ₹ 18,035 crore.
While profit from the renewables segment nearly doubled from a year earlier to ₹ 531 crore, profit from the thermal and hydro power generation segment fell 8% year-on-year to ₹ 502 crore.
The transmission and distribution segment's profit fell 14% from a year ago to ₹ 440 crore, largely due to lower profit from the company's power distribution business in Delhi.
Losses in other businesses dragged down Tata Power's consolidated first-quarter profit to ₹ 1,189 crore, including the share of joint venture partners.
Tata Power has softened its stance on thermal power assets, with the company now open to acquiring coal-fired power plants from the market or expanding the capacity of its existing units, Sinha said.
However, the company will continue to draw the line on investing in new thermal power plants, in line with its stated target of sourcing its entire power from renewable energy by 2045.
As of the June quarter, Tata Power had 9.3 GW of thermal power assets, 5.6 GW of solar and wind power, and 880 GW of hydroelectric power.
The company is also betting on pumped hydro power plants, which use water to store excess electricity generated using solar power during the day for providing steady electricity.
The industry is divided between using batteries and pumped hydro plants for the storage of excess power. While Tata Power will also invest in battery storage, directionally, it would prefer hydro storage, Sinha said.
Tata Power is investing ₹ 13,500 crore in building two pumped hydro storage plants—a 1,000 MW unit in Bhivpuri and a 1,800 MW unit in Shirwata. Both are in Maharashtra.
The Tata Power stock ended 2.11% lower on Friday to close at ₹ 389.3 per share on BSE. The earnings were disclosed post market hours. The benchmark Sensex index ended the session 0.72% lower.