Adani Power Reports Turnaround Results Aided by Rising Electricity Demand

Adani Power on Thursday posted a consolidated net profit of Rs 2.8 bn in the June 2021 quarter, mainly due to higher revenues and rising electricity demand.

In the year ago quarter, the company had reported a consolidated net loss of Rs 6.8 bn.

The response to Adani Power's results was muted as shares of the company opened on a flat note on the BSE.

Key financials

The company attributed the rise in bottomline to the rising electricity demand.

Electricity demand in India has recovered smartly after the slump witnessed during the Covid-19 lockdown.

Resumption of normal economic activity, coupled with inherent demand drivers has propelled the aggregate electricity demand to 341 BU in June 2021. This is 16% higher than demand of 293 BU during June 2020.

The company's total revenues rose to Rs 72.1 bn in the June quarter from Rs 53.6 bn in the same period a year ago.

Total expenses also rose to Rs 67.6 bn from 59.9 bn in the year ago period.

Finance costs for the quarter under review declined to Rs 10.7 bn. This was due to conversion of unsecured loans into unsecured perpetual securities during fiscal 2021, term loan repayment, interest rate reduction, and favorable currency movement.

Commenting on the performance, Adani Power's CEO Anil Sardana said,

• Our experience and excellence in various arenas, from plant operations and maintenance to fuel management, coupled with our locational advantage have helped us outperform the sector consistently.
  
  As we move closer to acquiring and turning around the fourth power asset, we are focusing on various excellence initiatives to enhance safety, reliability, predictability, and profitability of our entire portfolio.

Here's a table comparing Adani Power's results on key parameters.

Financial Snapshot

(Rs bn)	21-Jun	20-Jun	21-Mar
Revenue	72.1	53.6	69
Finance Costs	10.7	13.9	11.3
Total Expenses	67.6	59.9	66.7
Profit before tax	4.5	-6.3	2.3
Tax	2	0.7	2.2
Profit after tax	2.8	-6.8	0.1

Data Source: Company Filings

Delisting proposal

In June 2020, the board of Adani Power approved the voluntary delisting proposal by buying back shares at Rs 33.82 apiece.

However, the capital markets regulator is examining Adani Power's proposal to delist its shares from the exchanges.

Reportedly, this is because Adani Power announced a buyback of shares at a price that is almost 65% less than the prevailing market price.

The delisting price was announced last year. The date of the proposed buyback has already been extended several times by the board.

What makes matters worse for shareholders in the Adani group stocks is the wider ongoing probe by the market regulator.

Shares of Adani Power have fallen from Rs 155.8 in June to Rs 88.75 amid concerns following the investigation by the market regulator.

The regulator may have certain reservations about the delisting proposal because the stock of Adani Power has been making unusual movements of late.

• This raises doubts when the company values itself so much lower than the price resulting from trading by public shareholders.

A spokesperson for Adani Power said the company has not received any communication regarding the proposed delisting of Adani Power yet.

The regulator will get more clarity on the delisting proposal once the probe on several Adani group companies for alleged violations of securities laws is completed.

Muted response to results

Adani Power share price opened the day up by 0.5% at Rs 89.55 against its previous close of Rs 88.75.

It gained 3% to Rs 92.50 for a moment but fell back to opening levels shortly.

Adani Power shares have a 52-week high quote of Rs 167.05 touched on 9 June 2021 and a 52-week low quote of Rs 34.50 touched on 22 October 2020.

Over the past one year, shares of the company have rallied more than 150%.

At the current price of Rs 90, the company commands a marketcap of Rs 349.1 bn.

About Adani Power

Adani Power is engaged in power generation and setting up of power projects.

The company is carrying on the business of generation accumulation distribution and supply of power and to generally deal in electricity and to explore develop generate accumulate supply and distribute or to deal in other forms of energy from any source whatsoever.

Adani Power was the first company to implement and commission 660 MW supercritical technology units in India.

The company was incorporated on 22 August 1996 and received a certificate of commencement of business on 4 September 1996.

Adani Power was originally incorporated by Mr. Gautam Adani and Mr. Rajesh Adani together with their relatives.

To know more about the company, check out ADANI POWER company fact sheet and quarterly results.

For a sector overview, read our power sector report.

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