Tata Power Company Limited Q4 FY23 Earnings Conference Call Insights

Key highlights from Tata Power Company Limited (TATAPOWER) Q4 FY23 Earnings Concall

Q&A Highlights:

• [00:13:31] Sumit Kishore from Axis Capital asked what is driving the increase in other income in 4Q, going up to INR8.7 billion from INR2.59 billion in 4Q22. Sanjeev Churiwala CFO replied that several transactions impacted the company’s income in 4Q and the full year. Dividend from Arutmin was received and a shareholder loan line was converted to dividend. There was a one-off item of 83 crores positive and a hit of INR478 crores due to Tata Projects’ losses.

• [00:18:23] Sumit Kishore from Axis Capital enquired why has the JV and associate profit fallen sharply in 4Q and information on the performance of indoor coal and Tata Projects. Sanjeev Churiwala CFO said 4Q saw softening of Indonesian coal prices but mines had to pay higher royalty. This is expected to improve in the next few months. TATA Projects booked its share of JBoss and about INR200 crores in the last quarter, resulting in a softening of overall JV profits.

• [00:20:39] Sumit Kishore from Axis Capital asked about information on the EBITDA for Mundra UMPP in 4Q and FY23, fuel cost under recovery per kwhr, and any color on receivables under Section 11 that have been booked but not yet realized. Sanjeev Churiwala CFO said Section 11 means full cost pass through and four plants have started. During the year, there were various degrees of PPA and special requirements to start the plant. It is complex to manage everything on the call and it is suggested to drop a mail for better clarification.

• [00:22:02] Sumit Kishore from Axis Capital asked about the total receivables due for Mundra UMPP. Sanjeev Churiwala CFO replied that cash flows are continuously being received and in the latest appeal CRC said it just forms to be 50%. Net deals is not a significant amount and LCs are also carried.

• [00:23:22] Puneet at HSBC asked if it is correct that 30% of coal profits will be passed on to the customer and 70% will be retained. Praveer Sinha CEO said according to Section 11 order by CRC, 30% of mining profit must be paid on projects for coal brought from KPC to Mundra. Last year, only 15% of coal was brought from KPC and this year none, so there is no impact of profit share.

• [00:27:14] Puneet from HSBC queried if the company is prepared to bid for round-the-clock renewable projects with the ability to capture storage and trading. Praveer Sinha CEO said TATAPOWER has strong solutions for round-the-clock renewable energy, including solar, wind and storage. TATAPOWER is implementing a solar and storage project and working on pump storage projects and will offer cost-effective solutions to provide 24/7 power to customers.

• [00:29:31] Rajesh Majumdar with B&K Securities asked how do the current discovered tariffs for renewables hybrid projects compare to the fall in module and what are the ROEs at the current discovered tariff. Praveer Sinha CEO said discovered tariffs for renewables hybrid projects depend on the location and its factors such as cost of land, wind speeds and solar intensity. The cost of modules has come down from $0.32-$0.34 to $0.22-$0.23 due to increased demand and manufacturing capacity.

• [00:31:04] Rajesh Majumdar with B&K Securities queried about the current PLF for hybrid projects compared to standalone solar and has the PLF for solar projects increased compared to last year. Praveer Sinha CEO answered that the PLF for different locations depends on weather conditions. In some places it has gone up and in others it has not been good due to extreme weather conditions.

• [00:33:50] Bharanidhar ViyJayakumar from Spark Capital asked what has changed that caused the operations to start at Mundra since Section 11 was operational from mid-March. Praveer Sinha CEO replied that the money was paid after the decision and only a small amount of Section 11 payment is due. All the money has come in and other states have been asked to make payment in two weeks, which is why operations started from the 16th.

• [00:39:26] Girish Achhipalia from Morgan Stanley asked why is the renewable revenue down YoY for TPREL and WREL. Sanjeev Churiwala CFO replied that last year, TATAPOWER had a one-off revenue and profit that was booked. Removing the one-off YonY is higher. The one-off was some orders last year from regulatory commission.

• [00:41:56] Girish Achhipalia from Morgan Stanley enquired about the outlook for FY24 capex. Praveer Sinha CEO said TATAPOWER has commissioned about close to 4 gigawatts. In the pipeline, it’s close to about 2.6 gigawatt. Hopefully, the company will have higher capex in FY24 of around INR12,000 crore.

• [00:46:08] Abhishek Maheshwari with Sky Rich Wealth asked about the capex on transmission and distribution in FY24. Praveer Sinha CEO said 3,000 will be spent on manufacturing and 4,500 on renewable projects. There is also capex for the generation business and GD. The total may be around INR 3,000-3,500 crores.