Torrent Power Q1 Results Review - Spark Spread Spike Spurs Profitability: ICICI Securities

ICICI Securities Report

Torrent Power Ltd. is the largest private operator of gas-based power plants and a significant portion of it is untied. Hitherto, the untied capacity was a drag.

However, the rise in electricity demand this summer has improved capacity utilisation of its untied capacity. Further, the spark spread (power prices – cost of gas) has improved to Rs 3/unit.

As a result, aided by the incremental contribution from merchant sales (~of Rs 6 billion), it reported 57% YoY growth in operating profit and 88% YoY growth in profit for Q1 FY25.

However, we do not expect contribution to decline in the next three quarters, leading to moderation in quarterly profit. During the current quarter, the losses in distribution assets increased. We maintain 'Hold' amid expensive valuations.

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