Sustained selling of the Tata Power Company Ltd (TPCL) shares saw the scrip hit its 52-week low in both BSE and NSE on Friday after its rather muted first quarter performance.

TPCL shares shed nearly three per cent of their value today in addition to the near four per cent loss on Thursday after the results were announced.

While the first quarter revenue saw a slight dip compared to the corresponding quarter in the previous year, the profit after tax was up marginally.

But in the presentation made by the company to analysts, there were many issues concerning performance such as fall in power generation and decline in merchant power realisation due to fall in rates whose long-term implications were not clear, probably leading to heavy investor selling, with the overall weakness in the market adding to the selling frenzy.

The stand alone results for the first quarter of 2011-12 FY showed that there was an 11 per cent drop in gross generationto 3,889 million units (MUs) compared to 4,386 MUs in the same quarter in the previous financial year.

Lower power generation

Power generation, both in Mumbai and outside the megapolis were less and what was significant was why the generation was less in Mumbai. The company said the generation from Mumbai operations was 2,807 MUs compared to 3,156 MUs in the previous year.

This was because of lower generation from Unit 6 ‘as cheaper power could be purchased', implying that there was a demand contraction and it was not clear whether this would continue.

The power generation from outside Mumbai also dropped by 12 per cent to 1,082 MUs compared to 1,230 MUs in the same period last year. This was because of scheduled outage of Jojobera Units 1, 2 and 3 along with lower demand from Tata Steel, a group company, which had impacted sales performance.

Poor sales, realisation

Another key reason that affected the financial results was the mixed merchant sales and the average merchant sales realisation also went down in the last quarter. While merchant sales from Unit 8 were 142 MUs (down from 178 MUs), from Haldia it was higher at 221 MUs as against 187 MUs in the same quarter last year.

But there was a sharp drop in prices. While the average merchant realisation in Unit 8 was less at Rs 4.64 (Rs 5.41 in the previous year), in Haldia it slumped to Rs 3.62/ unit compared to Rs 5.06/ unit last year.

Though the revenue grew only by two per cent to Rs 1,842 crore in Q1 of this year (Rs 1,802 crore), the profit before tax at Rs 429.93 crore was higher by 16 per cent compared to the corresponding period last year (Rs 372.15 crore), which was mainly due to higher dividend from coal companies which was, however, off set by lower merchant realisations, lower PLF incentives, etc.

The share hit its 52-week low in both the exchanges but managed to make a marginal recovery at the close. In the NSE, the share touched the 52-week low of Rs 1,076 before closing higher at Rs 1,090.40 with a trading volume of 7.45 lakh shares.

In the BSE, the scrip touched the 52-week low price of Rs 1,078.85 before edging up to Rs 1,088.35 at the close. In both the exchanges, today's loss in price was about three per cent, and the scrip had lost about seven per cent in the past two days.

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