Despite margin pressures, power companies have averaged a 21 percent annual sales growth through the last three years, thanks to robust demand following the resumption of economic activities and heat waves sweeping large swathes of India.
While the topline for 24 power firms have increased to Rs 93,240 crore, the bottomline for the same set of firms during the fourth quarter of FY2022 jumped 32 percent on-year to Rs 15,593 crore, according to data from ACE Equities.
"We believe overall improvement in power companies was led by strong demand as well as better realisations. Going ahead, the demand is expected to remain robust and government initiatives towards renewable energy will also help drive growth," said Ajit Mishra, VP- Research at Religare Broking Ltd.
Operating margins, however, took a hit despite increased demand, due to higher input costs, especially coal. Total cost for the quarter under review increased 20 percent on-year and 16 percent on-quarter. Operating margins in Q4FY22 stood at 43.8 percent, compared to 46.4 percent in Q4FY21 and 42.9 percent in Q4FY20.
NTPC net profit grew 14 percent YoY to Rs 5,167 crore for the March quarter. Revenue for the state-owned utility major rose 23 percent on-year to Rs 37,085 crore from Rs 30,103 crore in the year-ago quarter. NTPC added 3,152 mega watts (MW) of new capacity during the year thereby taking its total installed capacity 68,962 MW.
PowerGrid Corp reported 8 percent YoY growth in its consolidated net profit at Rs4,156.44. Total income grew 2.3 percent YoY to Rs 11,067.94 crore. For Tata Power, revenue grew 16 percent and net profit jumped 31 percent. JSW Energy recorded an eight-fold surge in net profit and a 64 percent leap in revenues.
Analysts believe that India's growing urban population, improvement in economic activities in the recent months after significant population received vaccines, and the need for clean and reliable power supply provide a huge scope for continued growth in power demand.
Also, the high prices of imported coal due to geopolitical uncertainties are expected to send power tariffs through the roof, which could increase dependency on green power sources, analysts expect.
"With power production reviving to the pre-pandemic levels, the need for green power is expected to pick up strongly, as thermal power capacity remains stagnant to control carbon emission," said Vinit Bolinjkar, Head of Research, Ventura Securities Ltd.
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