Adani Power's Q2 FY24 consolidated net profit soared an impressive 848% to ₹6,594 crore from ₹696 crore in the same period last year, driven by a surge in power demand and beneficial tax adjustments leading to a tax gain of ₹1,371 crore. The surge in power demand was attributed to unusually dry weather, a drop in hydroelectric output, and heightened economic activity.
The company's average Plant Load Factor (PLF) increased from 39.2% to 58.3%, resulting in a 65% rise in power sales volume to 18.1 Billion Units (BU). This led to an operational revenue increase of 84.4% to ₹12,991 crore, despite a significant 25.4% rise in total expenses primarily due to soaring fuel costs.
The company's shares have surged by 25%, peaking at ₹389.50 on BSE, approaching its 52-week high of ₹409.70. Following these results, the company's BSE share price rose nearly 7%. The quarter's EBITDA was ₹4,336 crore (INR100 crore = approx. USD12 million), marking a 202% increase from Q2FY23, largely due to lower fuel costs and higher merchant tariffs.
Contributors to this surge include higher sales volumes, contributions from the Godda power plant, and increased merchant sales. Lower import coal prices also enhanced Power Purchase Agreements (PPAs) at the Mundra and Udupi plants via approved regulatory processes.
In contrast to Adani Power's successful quarter, Adani Enterprises' Q2 FY24 net profit plummeted over 50% owing to a downturn in the key coal division. Adani Power currently has an installed thermal power capacity of 15,210 MW spread across eight power plants in India and a 40 MW solar power plant in Gujarat, with significant power uptake in Mundra, Udupi, Raipur, and Mahan plants.
InvestingPro Insights
According to real-time data from InvestingPro, Adani Power has been yielding a high return on invested capital, which aligns with the company's impressive net profit surge in Q2 FY24. This is further supported by the company's strong earnings, which, as per InvestingPro Tips, should allow management to continue dividend payments, despite the fact that the company does not traditionally pay dividends to shareholders.
Additionally, Adani Power is currently trading at a low earnings multiple, and has seen a strong return over the last three months, which correlates with the 25% surge in the company's shares. This makes it an attractive option for investors looking for profitable opportunities in the Independent Power & Renewable Electricity Producers industry, where Adani Power is a prominent player.
However, it's important to note that analysts anticipate a sales decline in the current year, and expect the net income to drop. Despite these projections, they predict the company will remain profitable this year, which is consistent with the company's profitability over the last twelve months.
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