Torrent Power Limited , a prominent player in the Indian power sector, has made a strategic move to expand its generation capacity. The company has acquired significant equity stakes in two companies, securing control over approximately 922 acres of land in Madhya Pradesh's Annupur District for a planned thermal power project.

Acquisition Details

Torrent Power has acquired a 49% stake in Newzone India Private Limited (NZIPL) and a 100% stake in Newzone Power Projects Private Limited (NZPPPL) for a total consideration of ₹211.00 crore. The transaction provides Torrent Power with full control over NZPPPL and, by extension, NZIPL, as NZPPPL already held the remaining 51% stake in NZIPL.

Land Assets

The acquired land, held by NZIPL, comprises both private and government-leased parcels, spanning approximately 922 acres in the Annupur District of Madhya Pradesh. This strategic acquisition positions Torrent Power to implement its planned coal-based thermal power project in the region.

Financial Implications

It's worth noting that both NZIPL and NZPPPL currently have no turnover and hold no assets other than the land. The acquisition is purely for the land assets, which Torrent Power views as suitable for setting up a coal-based power plant.

Regulatory Compliance

In compliance with SEBI regulations, Torrent Power has disclosed the details of this acquisition to the stock exchanges. The company stated that no governmental or regulatory approvals were required for this transaction.

Strategic Importance

This acquisition aligns with Torrent Power's strategy to expand its power generation portfolio. By securing a large land parcel suitable for a thermal power project, the company is positioning itself for future growth in electricity generation capacity.

Timeline and Outlook

Torrent Power has indicated an indicative timeline of 4 months for the full completion of the acquisition process. This period likely includes various administrative and operational integrations.

As the Indian power sector continues to evolve, Torrent Power's move to acquire land assets for a new thermal power project underscores the ongoing importance of conventional power sources in the country's energy mix, even as renewable energy gains prominence.

Torrent Power , a leading player in the Indian power sector, has achieved a significant milestone by securing a contract for a major power project in Madhya Pradesh. The company has been awarded a Letter of Award (LOA) from MP Power Management Co. Ltd. for the development of a 1,600 MW coal-based ultra supercritical power plant.

Project Details

• Capacity: 2x800 MW Ultra-Supercritical power plant
• Location: Madhya Pradesh
• Awarding Authority: MP Power Management Co. Ltd.
• Contract Type: Letter of Award (LOA)
• Project Value: ₹22,000.00 crore
• Tariff: ₹5.83 per kWh
• Model: Design, Build, Finance, Own, and Operate (DBFOO)
• Expected Commissioning: Within 72 months

Long-term Power Purchase Agreement

A crucial component of this deal is the inclusion of a long-term Power Purchase Agreement (PPA). This commitment provides Torrent Power with a stable revenue stream and ensures a consistent power supply for Madhya Pradesh.

Financial Implications

The project is expected to have a significant impact on Torrent Power's financial performance and capacity:

• Increase in Generation Capacity: The project will increase Torrent Power's total locked-in generation capacity to approximately 9.6 GW
• Largest Investment: This represents the Torrent Group's largest investment in the power sector

Technology and Efficiency

The power plant will utilize ultra-supercritical technology, known for its higher efficiency and lower emissions compared to conventional coal-based power plants. This aligns with the growing emphasis on more environmentally conscious power generation methods, even within traditional fossil fuel-based systems.

Market Response

The market has responded positively to this development:

• Share Price: Torrent Power shares gained 2.53% to ₹1,258.30
• Trading Volume: 28.52 lakh shares worth ₹359.97 crore were traded

Analyst Outlook

Morgan Stanley has maintained an Overweight rating on Torrent Power:

• Target Price: ₹1,444.00
• Expected Returns: The brokerage expects the plant to generate internal returns of 15-17%
• Financial Structure: Anticipated 70:30 debt-equity ratio

The brokerage also noted Torrent Power's strong balance sheet with a net debt-to-EBITDA ratio of 1.4x and a net debt-to-equity ratio of 0.4x.

Strategic Importance

This contract marks a significant expansion of Torrent Power's generation capacity and strengthens its presence in Madhya Pradesh. The project is likely to enhance the company's portfolio and contribute to meeting the growing energy demands of the region.

The successful securing of this contract demonstrates Torrent Power's capabilities in handling large-scale power projects and its competitive position in the Indian power sector.