Key highlights from Nava Limited (NAVA) Q1 FY25 Earnings Concall
- Financial Overview
- NAVA Limited achieved its highest ever quarterly income of ₹1,288.4 crores, a 16.7% increase year-on-year.
- Profit before tax reached a record ₹513.8 crores, reflecting a 27.6% growth compared to the same period last year.
- Strong financial results are attributed to the company’s strategic focus on operational efficiency and cost optimization.
- Segment Performance
- The Mamba Energy Limited power plant operated at near-perfect 100% plant availability.
- The company has commenced the construction of an additional 300 megawatt power plant in Zambia.
- The metals division reported a profit before tax of ₹23.2 crores, compared to a loss of ₹1.6 crores last year.
- This improvement was driven by higher realizations and successful product diversification into periscope.
- Agri business made significant strides, with the successful completion of the plantation in Division 8 with over 90,000 trees.
- Power Plant Expansion
- Company has a 20-year PPA in place for the 300 MW power plant it is constructing in Zambia.
- As per the PPA terms, the plant will start operations two years from now, after the commercial operation date.
- The current PPA tariff is 10.3 cents, which will be reduced to 9.5 cents in the new PPA.
- The tariff will be linked to the US PPA inflation index each year.
- Debt Reduction
- The company has completely repaid its debt at NAVA, Maamba Collieries, Maamba Energy, and Nava Energy, resulting in no interest costs for the current quarter.
- The plan is to remain debt-free at Nava Energy for the next one or two years.
- However, some debt will be taken on for the phase two, $300 million expansion of Maamba Energy.
- On a consolidated level, NAVA will not be completely debt-free as it takes on significant capital expenditures.
- Avocado Production
- Expects revenue from its avocado product to be small, around $3-4 million, in the next financial year.
- However, the peak revenue from the avocado business is expected to be realized from the 2027-28 financial year onwards.
- Free Cash Flow
- Generated a free cash flow of around 500 crores at the group level in Q1 FY25.
- Evaluating opportunities to sell some of its non-core assets, such as the land parcels in Samalkot and Dharmavaram.
- Not in a hurry to sell these assets, as the land valuations in Andhra Pradesh have been increasing due to investor interest in the region.
- Cash Allocation Plans
- Company plans to utilize a significant portion of the cash flow for growth capital, such as the expansion of Maamba Energy, the Avocado Project, and the Ivory Coast Project.
- Exploring other opportunities to diversify its business, as some of its current sectors may face challenges in the next 20-30 years.
- Evaluating various corporate actions, such as buybacks or increased dividends, to further enhance shareholder value.
- Arbitration Award Payments
- In the current quarter, the company received $224 million from the arbitration awards.
- The monthly payment from the state utility is dynamic and dependent on their financial situation.
- Therefore, the company cannot commit to a fixed amount going forward.
- The equity contribution for the Maamba Energy expansion will be funded from the arbitration award proceeds.
- Zesco is currently paying $5 million per month towards the arbitration, but it’s expected to increase to $25 million.