JSW Energy reports 59% drop in Q2 profit, warns of more pain

JSW Energy’s net profit fell to Rs217.39 crore for the second quarter, from Rs533.77 crore in the year earlier period


JSW Energy said margins could be under pressure due to low merchant prices and low utilization of plants.
JSW Energy said margins could be under pressure due to low merchant prices and low utilization of plants.

Mumbai: Power producer JSW Energy Ltd on Wednesday reported a 59% drop in net profit for the fiscal second quarter and warned that margins would remain under pressure, sending shares down by more than 4%.

Net profit fell to Rs217.39 crore for the quarter ended 30 September from Rs533.77 crore in the year earlier, hurt by a decline in sales and production across three of its key plants. The year-earlier profit also included Rs150 crore of one-time items, the firm said.

Power generation in the quarter fell across the company’s Vijayanagar, Ratnagiri and Barmer plants. This hurt net sales, which fell 18.5% to Rs2,008.24 crore from Rs2,463.12 crore a year earlier.

Total generation, however, rose about 11% to 6.28 billion units from 5.64 billion units a year earlier because of higher power generation at its two hydropower assets that it had acquired from Jaiprakash Power Ventures Ltd last year.

The results also missed the street’s estimates. Twelve analysts polled by Bloomberg had expected JSW Energy to report consolidated net profit of Rs311.50 crore while 14 analysts had expected net sales of Rs2,369.60 crore.

Finance costs rose about 24% to Rs435.60 crore in the September quarter.

“International coal prices have seen a sharp uptick in recent months, and combined with low merchant prices and low utilization of plants, the margins are expected to remain under pressure. Moreover, the delays and lack of progress on conclusion of recent power off-take bids are expected to impact the generation volumes for the year,” the firm said in a statement.

A strong monsoon and inability of several state distribution companies (discoms) to buy power has hurt demand in the first half of this fiscal, the company said.

The company said one of its hydropower plants—Karcham Wangtoo in Himachal Pradesh —has filed petition for determination of final tariff with CentraI Electricity Regulatory Commission (CERC) “and pending the receipt of final tariff order, the revenue from sale of power under long-term power purchase agreements are being recognised in terms of expected tariff”.

JSW Energy has operational capacity of 4,531 MW and 1500 MW of capacity under agreements to acquire. Its consolidated debt as on 30 September stood at Rs13,738 crore.

On Wednesday JSW Energy shares fell 4.36%, or Rs3.05, to Rs66.95 apiece while benchmark index Sensex fell 0.91%, to close at 27,836.51 points.

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