Tata Power, one of Tata Group’s flagship companies, more than doubled its profiit in the first quarter of the current fiscal.

Higher income from its core business — power generation and distribution, and from the renewable sector subsidiaries particularly — drove consolidated profit higher from ₹72.5 crore in Q1 FY17 to almost ₹164 crore in the quarter ended June 30.

After Tata Power has expanded its renewable portfolio through an acquisition of Welspun Energy's renewable assets in 2016, the management of Tata Power indicated that a target of making 30-40 per cent of its generation capacity non-fossil based with no new investments into coal-based power generation facilities.

During the first quarter of this fiscal, Tata Power Renewable, the largest renewable subsidiary of Tata Power, registered 90 per cent growth in sales, 129 per cent increase in Ebidta and 427 per cent increase in profit after tax.

According to Motilal Oswal analysts, management of Tata Power is currently going slow on further expanding the renewable business as the renewable energy market is getting competitive as the recently quoted tariffs suggest single-digit IRRs. “Tata Power has around 300MW of RE projects in pipeline, which would be executed over the next one year. The company expects the market to normalise thereafter and then focus on capacity addition,” the brokerage report notes.

At the same time, Mundra Power project has been weighing on the company's profitability, analysts note. The company has been making multiple attempts to rescue its 4,000 MW Mundra Ultra Mega Power Project.

In June, Tata Power had written to the government proposing to sell 51 per cent equity of the ailing asset to them for a nominal ₹1 price.

While the decision on this is still awaited, Coastal Gujarat Power Ltd losses continue to widen. In the first quarter, it recorded incremental Ebitda loss of ₹296 crore.

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