JSW Energy’s results bear brunt of higher coal prices

JSW Energy’s results bear brunt of higher coal prices

JSW Energy Ltd’s performance in the quarter ended 31 December was hit on account of higher coal prices. The company’s consolidated fuel cost increased by 38% against the September quarter.

Fuel costs have accounted for 88% of expenditure in the December and September quarters. That has hit the operating profit margin. The company maintains that rising price of imported coal has affected margins as most of its fuel requirement is procured at index linked prices.

Also See Fuelling Concerns (PDF)

Coal prices have spiked considerably in the recent past on account of adverse global climatic conditions.

JSW Energy expects coal prices to correct in future, as weather conditions improve in Australia, which would offer some respite to them. However, analysts are not expecting any marked fall in the prices.

Operating profit grew by 9% sequentially to 354 crore on a revenue growth of 27% to 1,077 crore. Blended price realizations have remained unchanged compared with the September quarter at 4.43 per unit. Revenue growth was helped by higher sales.

The company sold 2,396 million units, which includes short-term sales of 1,596 million units and the rest sold under long-term power purchase agreements. The short-term sales saw 33% growth year-on-year.

Poor operating performance and higher interest and depreciation costs hit JSW Energy’s net performance. Net profit fell by 17% sequentially to 153 crore.

JSW Energy’s installed capacity increased to 1,730MW during the December quarter, thanks to the firm achieving commercial operation of Ratnagiri and Barmer units.

The plant load factor (PLF) achieved at Ratnagiri and Barmer units was lower than that of the Vijaynagar unit, where the units achieved a PLF of about 94%.

JSW Energy’s stock has underperformed the BSE-200 index of the Bombay Stock Exchange since the beginning of the fiscal, but so have other firms in the space.

The company maintains that though short-term prices for power remain under pressure due to deferment of power procurement, prices are expected to move upwards. But investors seem sceptical about that at the moment.

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