Nava Bharat Ventures tanks 15% on weak June quarter results

Shares of Nava Bharat Ventures tanked 15 per cent to Rs 107.20 on the BSE in the intra-day trade after the company reported a sharp 60 per cent year on year (YoY) drop in consolidated profit after tax (PAT) of Rs 38.45 crore for the quarter ended June 2021 (Q1FY22). It had posted a profit of Rs 95.43 crore in a year ago quarter.

Revenue for the quarter was down 6.9 per cent YoY at Rs 557.93 crore, while Ebitda (earnings before interest, taxes, depreciation, and amortization) declined 26.2 per cent YoY at Rs 231.69 crore for the quarter. Ebitda margin contracted 1190 basis points (bps) at 37.9 per cent from 49.8 per cent in Q1FY21.

Nava Bharat Ventures said financial performance of the quarter, relative to previous periods, was marked by buoyant ferro alloy operations and resurgent coal mining on the positive side while continued outage under major overhaul of one power unit in Zambia coupled with weakening merchant power market in India impacted it on the negative side.

The company further said unforeseen outage in one of the manganese smelters, accentuated by industrial oxygen shortage during the second wave of the pandemic resulting in lower production limited the gains from ferro alloy operations though average realisations jumped by 8.3 per cent for Q1 (QoQ).

“The major overhaul of one unit of the power plant which started in Jan 2021 is taking longer with a deformation observed in turbine’s diaphragms and carrier, repairs to which was not possible. Maamba Collieries Limited (MCL) had to get a new set of diaphragms manufactured, as these are not off-the-shelf items. Post operational of this unit, the major overhaul of another unit will be taken up during the financial year 2021-22 (FY22). With the prolonged major overhaul, the plant availability will be significantly lower for FY22 impacting the revenues and profitability,” Nava Bharat Ventures said in FY21 annual report.

Meanwhile, the Company expects captive consumption to remain the significant driver of business in FY22 with merchant sale of power in the spot market through Power exchanges improving some extent compared to the last financial year.

As regards to sugar manufacturing operations, the company said the available sugar stocks are expected to be sold off by August 2021 and the plant and machinery of the sugar, distillery and ethanol plant are being sold on a piecemeal basis. The Company is evaluating the available business options for monetizing the land bank, it said.