JSW Energy comes out with a weak report card; stock dives 10 per cent

Integrated power company JSW Energy announced a weak set of Q3FY16 numbers, which were below analyst expectations as profits were dragged down by a sizeable increase in financing cost according to the company’s filing submitted to the stock exchange.

JSW Energy is a power company. The Company is primarily engaged in generation and sale of power. Company's operating segments include Power Generation; Power Transmission; Mining; Power Trading; and Equipment Manufacturing. Company is a part of JSW Group.

JSW Energy’s Q3FY16 consolidated revenues increased by 11 per cent on a Y-O-Y basis compared to the same quarter in the previous year. Total revenues from operations came in at Rs 2649.1 from Rs 2380.8 crore on a yearly basis driven largely by generation from hydro assets. EBITDA for the quarter in review was up 22 per cent compared to the corresponding quarter last year. Q3 EBITDA came in at Rs 1191.3 from Rs 974.15 crore, primarily driven by lower fuel costs, and additional generation from the hydro assets of the company. Power and fuel as a percentage to total revenue declined by 800 basis points to 46 per cent owing to favourable energy prices. Energy major saw its margins expand by 400 basis points. Company earned a profit after tax of Rs 320.68 crore down 16 per cent compared to the same period last fiscal.  Profits were also on a lower side due to increase in the financing cost which increased by 58 per cent to Rs 449.12 crore from Rs 284.32 crore.

Consolidated net debt for the quarter ending December 2016 was at Rs 15,506 crore with a net debt to equity ratio of 1.80 times indicating a good solvency position of the company.

Sequentially too, revenues rose by 5 per cent, whereas EBITDA increased by 19 per cent.

According to the company, electricity demand in India has been growing steadily this year, but the growth in supply has been outpacing the growth in demand, and consequentially the price remains low. Subdued industrial activity has also been a hinderance as it has impacted the spot tariff rates.

Reacting to the weak set of results stock declined more than 10 per cent to hit an intra-day low of Rs 66.80. JSW Energy scrip closed the day at Rs 69.60 down by 6.5 per cent on BSE.