Torrent Power surges 13% on signing Rs 47,350 cr-projects with Gujarat govt

Shares of Torrent Power surged 13.5 per cent on the BSE to a fresh high of Rs 1,071.6 in Thursday’s intra-day trade after the company signed Memorandum of Understandings (MoUs) for projects worth Rs 47,350 crore with the Gujarat government.

In the past two months, the stock has outperformed the market by surging 38 per cent. Its previous record high of Rs 1,045.35 was touched on December 7, 2023.

The four MoUs were signed between Torrent Power and Gujarat Energy Development Agency (GEDA) in Gandhinagar under the 10th edition of Vibrant Gujarat Global Summit.

The MoUs entail setting 3,450 MW of solar power projects, 1,045 MW of hybrid power projects, associated infrastructure for 7,000 MW solar project, green hydrogen/green ammonia output facility and capex for distribution network.

The management said Torrent Power intends to make a significant portion of its future investments across key national priorities of renewable generation, pump storage hydro projects, green hydrogen / green ammonia production and power distribution.

Torrent Power is one of the largest companies in the country’s power sector with presence across the entire power value chain – generation, transmission and distribution.

For the first half of fiscal 2024, Torrent Power’s earnings before interest, taxes, depreciation, and amortization (Ebitda) improved to around Rs 2,406 crore from Rs 2,224 crore for the same period last year. 

This was on account of strong performance in the franchisee distribution business segment led by lowering of losses, increase in power demand across all distribution areas, contribution from acquired renewable assets and contribution from its 1,200 MW combined cycle gas power plant in Dahej, Gujarat.

In terms of operating performance, plant load factor (PLF) of the company’s lone thermal asset continued to operate at high levels in the first-half of fiscal 2024 as demand for power in the country continued to grow.

Operating performance is likely to continue to improve in the current fiscal with steady recovery in the franchise distribution business, as per CRISL Ratings. 

It added that further focus on the licence distribution business with assured return on equity model, coupled with judicious expansion in renewable businesses, should help continued growth in Ebitda. 

The rating agency in a rationale said it understands the company may augment its generation capacity through the inorganic route to support the increasing demand in its distribution regions. Also, from a growth perspective, it might enter into new distribution areas.

However, the management has guided to keep leverage and capital structures within the rating threshold on a sustainable basis. Conversion of any such opportunity to expand capacity or distribution area will be monitorable, it said.