Torrent Power jumps 7% on ₹22,000-cr investment in largest power project

Torrent Power shares rose 7 per cent after it secured a LoA to set up a coal-based thermal power project in Madhya Pradesh for ₹22,000 crore

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Shares of Torrent Power rose nearly 7 per cent after the company secured a Letter of Award (LoA) to set up a 1,600 megawatt (Mw) coal-based thermal power project in Madhya Pradesh for ₹22,000 crore. 

 

The power utilities firm's stock rose as much as 6.89 per cent during the day to ₹1,311.9 per share, the steepest intraday rise since May 12 this year. The stock pared gains to trade 2.5 per cent higher at ₹1,258 apiece, compared to a 0.44 per cent advance in Nifty 50 as of 10:11 AM. 

 

Shares of the company snapped a three-day losing streak and currently trade at 25 times the average 30-day trading volume, according to Bloomberg. The counter has fallen 16 per cent this year, compared to a 3.7 per cent advance in the benchmark Nifty 50. Torrent Power has a total market capitalisation of ₹63,025.74 crore.  

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Torrent Power to invest ₹22,000 crore in 1,600 Mw thermal project 

The company said it plans to set up a 1,600 megawatt (Mw) coal-based thermal power project in Madhya Pradesh, marking the Torrent Group's single largest investment in the power sector, according to an exchange filing. The project, estimated to cost about ₹22,000 crore, will be developed as a greenfield 2x800 Mw ultra-supercritical power plant. 

 

The company has received a LoA from MP Power Management Company Limited (MPPMCL) for long-term procurement of power under a 25-year power purchase agreement. Torrent Power will supply the entire capacity to MPPMCL at a tariff of ₹5.829 per kilowatt-hour.

 

The project will be developed under the Design, Build, Finance, Own and Operate (DBFOO) model. Coal for the plant will be arranged by MPPMCL under the Ministry of Coal’s SHAKTI policy. The plant is expected to be commissioned within 72 months of signing the agreement.

 

Torrent Power said the project will be based on ultra-supercritical technology, which is more efficient and has lower carbon emissions compared with conventional thermal power plants. The project is expected to create about 8,000 to 10,000 direct and indirect jobs during its construction and 1,500 direct and indirect jobs during its operations phase, the statement said.  

 

Torrent Power Q1 results 

The company reported over 25 per cent dip in consolidated net profit to ₹741.58 crore in the June quarter due to lower revenues from generation as well as transmission & distribution businesses over lower electricity demand. Total income declined to ₹8,011.04 crore during the quarter from ₹9,110.02 crore in the same period a year ago.

 

The company explained that while the company's underlying business remains resilient, the performance during the quarter was particularly impacted due to lower power demand following the early onset of monsoon and elevated gas prices, impacting merchant gains from gas-based generation.