JSW Energy Limited has reported its consolidated net profit for the third quarter ended December 31 has almost tripled to Rs 146 crore from Rs 46.8 crore in the corresponding period last year. 

Company’s net generation went up by 3 per cent y-o-y while its total revenue has increased by 20 per cent in Q3Fy19 to Rs 2,492 crore from Rs 2,081 crore in the corresponding quarter of FY18 due to better realisations achieved for both merchant capacity and capacity tied with long-term power purchase agreements (PPAs). 

Currently, out of JSW Energy’s total 4,541MW capacity 80.5 per cent is tied up with PPAs and the rest 19.5 per cent is realising generated power in the spot market. 

JSW Energy’s earnings come against a backdrop of rising prices of imported coal coupled with rupee depreciation which impacted many power sector players operating thermal power plants using imported coal. 

For JSW Energy whose Ratnagiri and Vijaynagar plants are based on imported coal, the fuel cost for the quarter increased by 24 per cent to Rs 1,447 crore as against Rs 1,171 crore in the same quarter last year. 

However, according to Prashant Jain, joint MD, JSW Energy, the realisation during the quarter was more than the fluctuation in the fuel price leading to improvement in the dark spread. “In next two years we will be seeing better dark spread in the merchant prices than in last two years,” Jain added. 

The dark spread is a commonly used metric for estimating returns over fuel costs of thermal power generators.

According to Jain, the company has also achieved better energy efficiency both during the quarter and during last nine month, contributing to better profits. Company’s interest cost, too, was down by 13 per cent during the quarter to Rs 295 crore from Rs 341 crore in the corresponding quarter of previous year. 

JSW Energy has reduced its net debt by Rs 296 crore through prepayment and scheduled repayments taking its net debt to equity ratio to 0.90x. Company’s consolidated net debt as on December 31, 2018 stood at Rs 10,686 Crore.

Growing demand

Jain expects the power demand in the country to grow at 6.2 - 6.5 per cent during the current fiscal. According to him, with the peak demand of 167 GW and base demand of close to 150 GW, the additional demand of around 15-16 GW would be coming up. 

“In the next two years timeframe you will see that average PLF which is today around 61 per cent will go to up to 73 per cent because no new capacity is coming up and rather some capacity is getting retired,” Jain said. 

He added that since additional of renewable capacity has slowed down significantly, the new power demand can only be met by existing thermal plants operating at higher PLFs.

JSW Energy will continue to explore opportunities in the stressed asset space. “I am confident that more consolidation is going happen in the next one year than what we have seen in last 12 month,” Jain said. 

When asked on the progress of e-vehicle venture that JSW Energy announced last year, Jain said the company has made significant progress and will be making an announcements during the ongoing quarter, refusing to share more details.

Shares of JSW Energy closed at Rs 67.90, up 5.68 per cent on BSE.