Tata Power Company Limited Q4 FY24 Earnings Conference Call Insights

Key highlights from Tata Power Company Limited (TATAPOWER) Q4 FY24 Earnings Concall

• Power Demand
  • Electricity demand in India grew by 8% in the previous year.
  • In March-April 2024, demand increased by 10.5% before summer started.
  • Peak demand reached 224 GW on April 29, 2024, compared to 208 GW last year.
  • Expected peak demand is 260 GW, requiring efforts to meet energy requirements.
• Quarterly Performance
  • Coal, hydro, transmission, and distribution businesses performed well.
  • Odisha discoms showed substantial improvement after resolving billing and debt issues.
  • All four Odisha discoms started making profits within three years.
• Renewable Energy
  • Significant renewable project implementation in FY24 after delays in previous years.
  • 4 GW projects expected in FY25, including 2.5 GW utility-scale and 1.5 GW third-party.
  • 4 GW module plant commissioned, 4 GW cell plant to be commissioned soon.
  • Won around 2 GW of bids from 40 GW ordered last year.
  • Focusing on complex/hybrid bids over pure-play solar/wind.
  • Leadership in rooftop solar, expecting active role in PM Surya Ghar Yojana.
• EV Business
  • 86,000 home chargers, 5,500 public chargers, 900 bus chargers installed.
  • Focus on supporting e-mobility initiatives with charging infrastructure.
• Rooftop Solar
  • Government scheme targets 25-30 GW rooftop solar installation in 3-4 years.
  • Tata Power expects 20% market share, leveraging current 2 GW installed capacity.
  • Will utilize own manufacturing capacity to meet Domestic Content Requirement.
  • Targets 4-5% PAT margin in rooftop solar EPC business.
• Tata Projects
  • Turned profitable in Q4 (INR 32 crore) after losses previously.
  • Full year profit with solid order book position.
  • Expected to deliver better results going forward.
• Dividends and Divestments
  • Received $90 million dividend from ITPC after settlement agreement.
  • Expecting $40-60 million dividend from ITPC next year.
  • Ongoing $10-15 million annual dividend expected from ITPC.
  • Arutmin divestment proceeds already received, no further amount remaining.
• Utility Scale Renewables
  • Government plans for 50 GW utility scale renewable bids this year.
  • Tata Power selective in bidding, focusing on hybrid and Fixed Duration Renewable Energy (FDRE) bids.
  • Expects better margins due to complexity, limiting competition.
  • Already has 5 GW+ project execution pipeline, including 1.8 GW won last year.
• Manufacturing Capacity Utilization
  • 4 GW cell and module capacity being commissioned.
  • Initially utilizing for captive requirements to meet contracts.
  • Potential to sell outside after ramping up capacity utilization.
• Mundra Plant and Coal Mining
  • Mundra plant operating under Section 11 cost-plus model throughout the year.
  • Aiming for cash breakeven at Mundra.
  • Coal mining realizations stabilizing after high prices in FY23.
  • One-off high dividend from coal mining not expected in near future.
• Renewable Energy Asset Impairment
  • Impairment of around INR 100-150 crore per year expected.
  • Non-cash charge for unwinding goodwill from Welspun asset acquisition.
  • Overall surplus available after impairment test.
• Merchant Power and Regulations
  • Around 300 MW merchant capacity from Haldia and other plants.
  • Positive outlook based on demand-supply situation.
  • No plan to cap merchant power prices as of now.
• Growth Targets
  • Company on track to double revenue, EBITDA and profit over FY23-FY27 as planned.
  • Capacity additions in renewables, manufacturing, transmission projects to drive growth.
  • FY24 saw 10% revenue growth, 12% profit growth, reaffirming roadmap.
• Fixed Duration Renewable Energy
  • FDRE with renewable plus storage seen as future, replacing greenfield thermal.
  • Customer preference for green energy driving demand for such solutions.
  • Viable alternative to thermal capacity addition in next 2-3 years.
• Working Capital Management
  • Significant reduction in average working capital to around INR 3,500 crore.
  • Improved financial discipline, collection from retail customers, and timely payments contributing.
  • Supply chain management efforts also aiding working capital optimization.
  • Allowed high capex of INR 12,000 crore with stable debt levels.
• Debt and Capex Plans
  • Targeting debt-equity ratio of around 1.5 as comfortable level.
  • Focus on improving cash flows to self-fund larger part of capex.
  • Renewable pipeline of 5.4 GW over 2-3 years requiring INR 15,000-20,000 crore capex annually.
• Wind Energy Program
  • Approach involves combination of solar, wind and battery storage projects.
  • Will build wind capabilities as per requirements of hybrid/RTC projects.
  • Targeting returns better than mid-teens for such projects.
• Transmission Business Plans
  • Selective in bidding for transmission projects based on timelines and ROW issues.
  • Won 2 projects last year, INR 2,300 crore out of INR 40,000 crore ordered.
  • Aggressive plans for some states, creating a quality transmission portfolio.