Tata Power Reports Improved Profitability In Q4

Tata Power, a Tata Group company, has reported a topline growth of 25% to Rs 9032 crore in the fourth quarter of FY13. Its net profit after minority interest stood at Rs 181 crore against a loss of Rs 628 crore during the corresponding quarter last year. For the full year, the company has reported a 27% jump in revenues to Rs 33025 crore. The net profit before minority interest is at Rs 98 crore against a loss of Rs 968 crore in the earlier year. Despite the lower profitability, the company has announced a dividend of Rs 1.15 per share.

Tata Power has a generation capacity of 8521 MW, making its largest power producer in the country. During the year, the company generated a total of 15770 million units (MU) of power against 15230 MU in FY12. It sold a total of 16002 MU of power in FY13 against 15240 MU in FY12.

Revenues from its major business, i.e Power, were up 41% at Rs 6500 crore. The PBIT margins of this business increased by 800 bps to 20.72%. The PBIT margins from the power business also fell from 21.66% on Q4FY12 to 7.69% in Q4FY13. The Coal business revenues declined by 5% to Rs 2219 crore following lower realisations. The coal realisations during the quarter were at USD 72.3 per tonne against USD 92.6 per tonne.

The group’s EBITDA margins were at 20.54% during this quarter, against 20.52% in Q3FY13 and 20.18% in Q4FY12. This is a positive sign. The per unit realisations were about 3% weaker on a YoY basis. The improvement in margins, however, was mainly due to the drop in fuel prices, which stood at Rs 2.9 per unit against Rs 3.55 a year ago.

Over an analyst call, the company said that it had imported some low cost coal from US and Columbia, which reduced its fuel costs. Even on a sequential basis, there was a 20% drop in fuel cost. A few cost items such as fuel, power and raw materials have shown a sharp rise on a yearly basis. Depreciation costs, however, have remained nearly flat despite the fact that the company has fully commissioned its Mundra UMPP.

Recently, the company received a breather in its Mundra project, when the CERC allowed Tata Power to recover higher fuel costs from this project. Anil Sardana, MD, Tata Power has said that the company is looking forward to an expeditious resolution on compensatory tariff, which will be finalised by the committee set up as per CERC's direction.

Overall, Tata Power’s operating performance has been better this quarter compared to that in the last few ones. The final tariff decision will be a make or break one, and investors should wait until a final decision comes from the committee.