Torrent Power , one of India's leading integrated power utilities, reported a 26% year-on-year decline in its consolidated net profit for the first quarter. The company's performance was impacted by lower power demand due to an early monsoon onset and elevated gas prices, affecting merchant gains from gas-based generation.

Financial Highlights

• Consolidated net profit fell to ₹741.58 crore in Q1, down from ₹996.34 crore in the same period last year.
• Revenue from operations decreased by 12.5% to ₹7,906.37 crore, compared to ₹9,033.73 crore in Q1 of the previous year.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) stood at ₹1,588.00 crore, down from ₹1,934.00 crore in the corresponding quarter of the previous year.

Segment Performance

Key Factors Affecting Performance

Jinal Mehta, Vice Chairman & Managing Director of Torrent Power, stated, "Whilst the Company's underlying business remains resilient, the performance in the current quarter was particularly impacted due to lower power demand following the early onset of monsoon and elevated gas prices, impacting merchant gains from gas-based generation."

Positive Developments

Despite the overall decline, the company reported some positive developments:

1. Renewable Segment Growth: Improved contributions from the renewable segment, driven by solar capacity additions and favorable wind conditions, resulting in better Plant Load Factor (PLF).

2. Distribution Business Improvement: Adjusted for one-time tariff order income in the previous year, the company saw improvement in operational parameters, contributing to higher profitability in the Distribution business.

Operational Highlights

• The company's gas-based power plants showed mixed performance, with SUGEN and UNOSUGEN plants experiencing lower PLF, while DGEN saw an increase.
• Renewable energy assets, particularly wind power, demonstrated improved PLF compared to the previous year.
• Distribution losses in licensed areas remained low, with Ahmedabad at 3.33% and Surat at 2.81%.

About Torrent Power

Torrent Power is an integrated power utility with a presence across the entire power value chain of generation, transmission, and distribution. The company has an aggregate installed generation capacity of 4,881 MWp and serves nearly 4.21 million customers across various regions in India.

As Torrent Power continues to adapt to market dynamics and invest in renewable energy, it aims to play a key role in India's energy transition while maintaining its position as a leading power distributor in the country.

Torrent Power Ltd., a prominent player in the Indian power sector, is reportedly in discussions to acquire the thermal business unit of Larsen & Toubro Ltd. (L&T) for approximately $1.00 billion, including debt. This potential deal could mark a significant shift in the Indian power industry landscape.

Potential Acquisition Details

• Torrent Power is in talks to acquire L&T's thermal power unit
• The deal is valued at approximately $1.00 billion, including debt
• Both companies are working with advisers on the potential transaction

Strategic Implications

For L&T:

• The disposal would help L&T raise cash to reduce its debt burden
• L&T has been evaluating the sale of its thermal unit to focus on its core engineering and construction business
• The company had previously held talks in 2021 to merge the asset with Sembcorp Industries' Indian arm

For Torrent Power:

• The acquisition could significantly expand Torrent Power's presence in the thermal power sector
• It aligns with Torrent Power's existing portfolio of power generation, transmission, and distribution services

Market Performance

• Torrent Power shares have declined around 9% this year
• The company currently maintains a market value of nearly $8.00 billion

About Torrent Power

Torrent Power, owned by the Torrent Group, is a diversified power sector company providing:

• Power generation services
• Transmission services
• Distribution services
• Manufacturing of power cables

Deal Status

It's important to note that the deliberations are ongoing and subject to change. The talks may potentially fall apart, or other bidders could emerge. Both companies and their stakeholders will be closely watching the developments of this potential transaction.

This potential acquisition reflects the dynamic nature of India's power sector, with companies strategically positioning themselves for future growth and efficiency. If successful, the deal could have significant implications for both Torrent Power and L&T, potentially reshaping their roles in the Indian energy landscape.