Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tata Power Co Ltd (BOM:500400, Financial) reported its 21st consecutive quarter of PAT growth, demonstrating strong performance across its business segments.
- The company's renewable business showed significant growth, with EBITDA increasing by 38% and PAT also rising for the quarter and the full nine months.
- Tata Power Co Ltd (BOM:500400) has successfully stabilized its Odisha operations, improving billing efficiency, collection efficiency, and reducing AT&C losses.
- The company has a robust CapEx plan, having spent INR12,000 crores in the last nine months and planning an additional INR10,000 crores in the current quarter.
- Tata Power Co Ltd (BOM:500400) is committed to achieving 70% clean energy by 2030, with current projects already bringing them to 43% clean energy.
Negative Points
- The demand for power has not increased as much as in previous years, although a rise is expected with the upcoming summer.
- There are uncertainties surrounding the Nuclear Power Act amendments, which could impact Tata Power Co Ltd (BOM:500400)'s plans to invest in nuclear power.
- The company's EPC business faced revenue reversals due to intercompany billing adjustments, affecting the top line.
- There is volatility in intersegment elimination, which hampers the predictability of Tata Power Co Ltd (BOM:500400)'s financials.
- The renewable generation business profitability growth was not as high as expected despite a 25% capacity addition, partly due to lower PLFs and project delays.
Q & A Highlights
Q: What are Tata Power's expectations for the nuclear power business model and timeline for small modular reactors?
A: Praveer Sinha, CEO, mentioned that while details are still emerging, the approval process for nuclear plants is stringent and takes about 24 months, with construction taking an additional four to five years. The company is optimistic about implementing new technologies faster but awaits more information before finalizing timelines and plans.
Q: Can you provide insights on the approved list of module and cell manufacturers and its implementation timeline?
A: The approved list of module manufacturers has been in place since April 2024, and the list for cell manufacturers will be implemented by July 2026. The Ministry is conducting due diligence, and the list is expected to be published before the June 2026 deadline.
Q: What was the revenue reversal in the EPC business during the quarter, and why do margins appear high?
A: Sanjeev Churiwala, CFO, explained that the revenue reversal was due to truing up accounts post-merger, resulting in lower top-line revenue but no impact on profitability. The high margins are optical due to lower revenue, with YTD margins reflecting the correct range of 5% to 7%.
Q: How does Tata Power plan to handle the internal and external sales of solar cells and modules?
A: The profitability from external sales will be captured in the manufacturing division, while internal sales will be eliminated. The company is ramping up cell production, and more clarity on reporting will be provided in future quarters.
Q: What is the status of Tata Power's renewable capacity installation plans for FY26 and FY27?
A: Tata Power aims to install 2 to 2.5 gigawatts of renewable capacity annually. The company has already added 865 megawatts this year and plans to add another 600 megawatts in the current quarter, with a mix of solar and wind projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
