Torrent Power Q2 Profit Declines 8.6% Amid Reduced Thermal & Renewable Output
Company Overview
Torrent Power Ltd. is a leading integrated power utility in India, engaged in generation, transmission, and distribution of electricity. The company is part of the Torrent Group, a major business conglomerate. Known for its focus on efficiency and sustainability, Torrent Power operates across the power value chain, offering a diversified mix of thermal, renewable, and gas-based energy generation. Torrent Power’s generation portfolio includes a growing share of renewables, aligning with India’s green energy goals. It has more than 8200 employees working for the success of company. Torrent Power has a significant footprint in Gujarat, Maharashtra, Uttar Pradesh, and Madhya Pradesh. With India’s increasing focus on renewable energy, urban electrification, and energy efficiency, Torrent Power is well-positioned to capitalize on these trends. The company aims to increase its renewable capacity to 2,500 MW by 2025and enhance its digital and operational capabilities in power distribution and transmission.
Industry Outlook
India’s power industry is a vital component of its infrastructure, supporting the country’s rapid economic growth and urbanization. With growing demand for reliable and sustainable energy, the industry is evolving to address supply constraints, improve efficiency, and embrace renewable energy sources. The Central Electricity Authority (CEA) projects India’s power demand to reach around 817 GW by 2030, up from 416 GW in 2023, fuelled by increased residential and industrial consumption. India aims to achieve 500 GW of non-fossil fuel-based energy capacity by 2030 and Net Zero emissions by 2070. The Revamped Distribution Sector Scheme (RDSS) introduced in 2021 focuses on improving DISCOM performance with a ₹3 trillion investment, aimed at reducing AT&C losses to below 15% by 2025. Despite renewable energy growth, coal continues to account for 57% of India’s energy mix.
Financial Summary
| INR Cr. | Q1 FY25 | Q2 FY25 | FY23 | FY24 |
| Revenue | 9034 | 7176 | 25694 | 27183 |
| EBITDA | 1858 | 1207 | 4789 | 4596 |
| OPM | 21% | 17% | 19% | 17% |
| PBT | 1315 | 689 | 3041 | 2583 |
| Net Profit | 996 | 496 | 2165 | 1896 |
| NPM | 11.09% | 6.91% | 8.42% | 6.97% |
| EPS | 20.23 | 10.01 | 44.06 | 38.14 |
| C&CE | 423 | 446 | 344 | 419 |
Business Segments:
- Transmission & Distribution: The Company is a licensed operator for electricity distribution in Ahmedabad, Gandhinagar, Surat, Dahej SEZ, etc. aggregating to 2,050 sq. km of area. It distributes nearly 30 billion units of power to over 4.13 million customers. The company operates 355 km of 400 kV and 128 km of 220 kV double circuit transmission lines and is building two new transmission assets of 104 km 400 kV for Rs. 1,300 Cr.
- Thermal Power Generation: The Company has an aggregate installed thermal power generation capacity of 3,092 MW, including 2,730 MW of gas-based and 362 MW of coal-based power plants.
- Renewable Power Generation: The Company has a solar power generation capacity of 2,091 MWp including 403 MWp operational and 1,688 MWp under development, further, it has a wind power generation capacity of 2,260 MW, comprising 921 MW operational and 1,339 MW under development.
Subsidiary Information:
- Torrent Power Grid Limited (TPGL): It is currently operate 354 km of 400 kV double-circuit transmission lines and 128 km of 220 kV double-circuit transmission lines for the transmission of power generated at our gas-based power plants to various off-take centres.
- Solapur Transmission Ltd: Power transmission, specifically the development and operation of transmission infrastructure in and around Solapur, Maharashtra. It plays a crucial role in improving grid reliability and supporting the transmission of electricity in the region, enabling Torrent Power to deliver efficient services. The work includes setting up, managing, and maintaining transmission lines and substations to ensure stable electricity supply and reduce transmission losses.
- Torrent Pipavav Generation Ltd: It is a subsidiary of the company and a joint venture between the Company and Gujarat Power Corporation Limited (“GPCL”), had made payments in nature of compensation for the acquisition of private land as per the court orders in Amreli, Gujarat for the purpose of developing a coal-based power plant of 1,000+ MW.
- Torrent Solargen Ltd: It focuses on renewable energy, specifically in the domain of solar power generation. It plays a crucial role in Torrent Power’s strategy to diversify its energy portfolio and enhance its presence in the renewable energy sector. It aligns with India’s renewable energy goals under government policies like the National Solar Mission.
- And there are other subsidiaries for city wise production and distribution like in Bhiwandi, Surat, Ahmedabad, etc. and Torrent Urja subsidiaries for renewable and solar energy distributions.
Q2 FY25 & Business Highlights
- Revenue of ₹7176 crore in Q2 FY25 up by 3.09% YoY from ₹6961 crore in Q2 FY24.
- EBITDA of ₹1207 crore in this quarter at a margin of 17% compared to 18% in Q2 FY24.
- Profit of ₹496 crore in this quarter compared to a ₹543 crore profit in Q2 FY24.
- The thermal generation segment had a revenue of ₹1833 crore in Q2 FY25 vs ₹1963 crore in Q2 FY24.
- The Power Transmission and Distribution segment had a revenue of ₹6596 crore in Q2 FY25 vs ₹6352 crore in Q2 FY24.
- The Thermal Generation segment had a revenue of ₹291 crores in Q2 FY25 vs ₹366 crores in Q2 FY24.
- The company has installed a total capacity of 4850 MWp but by adding the pipeline the capacity increases to 7559 MWp.
- The Solapur Transmission project (in the new SPV) for the evacuation of 1,500 MW RE power was won by the company through the Tariff-Based Competitive Bidding (TBCB) process, and the expected project cost is ₹470 crore.
- Sites/projects of 8.4 GW are under the planning stage in the states of Maharashtra and Uttar Pradesh and received LOA from MSEDCL for a 2,000 MW/16,000 MWh pumped hydro storage project in Raigad District with energy storage capacity for 40 years.
- One of the reasons for low PAT is due to an increase in finance & depreciation costs due to capex & commissioning of additional renewable generation capacity.
SWOT Analysis: A Closer Look at Key Business Dynamics
Strengths:
- Efficient Distribution: Demonstrates robust supply chain and energy delivery mechanisms.
- Integrated Operations: Combines generation, transmission, and distribution for seamless functionality.
- Strong Financial Position: Solid financial health supports sustained growth and investment opportunities.
Weaknesses:
- Geographic Concentration: Limited presence in diverse markets may restrict growth potential.
- Regulatory Changes: Vulnerable to shifts in government policies and regulations.
- Debt Levels: Higher borrowing could pose financial strain.
- High Project Expenditure: Significant investments required for infrastructure and expansion.
Opportunities:
- Renewable Energy Expansion: Growing focus on sustainable energy solutions presents untapped potential.
- Grid Modernization: Technological upgrades and innovation in grid systems can enhance efficiency.
- Global Collaborations: Partnerships with international players can open new avenues for growth.
Threats:
- Competition: Intense rivalry in the energy sector can impact market share.
- Coal Supply and Price Fluctuation: Dependence on coal exposes the business to supply and cost volatility.
- Climate Risks: Environmental challenges and stricter climate regulations may pose operational hurdles.