Tata Power’s Analyst Call Q1 FY23: Large-Scale Renewable Projects, Orders In Offing

Tata Power Renewable Energy Ltd Inks PDA for 13.2 MW Group Captive Solar Plant 

Close on the heels of its announcement of Q1 FY 23 results, an analyst call of Tata Power has further shed light on the Q1 FY23 earnings of the power company. The participants of the call included Dr. Praveer Sinha, CEO and MD of TATA Power; Sanjeev Churiwala, CFO; Jinendra Patil, Financial Controller; Soundararajan Kasturi, Investor Relations and members from the finance team.

Dr. Praveer Sinha

Here are the key takeaways on the renewable aspects of the company as revealed by Dr. Praveer Sinha during the analyst call-

1. Dr. Sinha revealed that the company has witnessed remarkable progress with respect to renewable transaction in the last two months, while announcing in the same breath that the Competition Commission of India (CCI) had given a nod for a transaction in the offing. Its first tranche of ₹ 2,000 crore is expected in the next few weeks.

2. The CEO further informed that the power giant had been working with the procurers, “especially the Gujarat procurers to finalize the long term arrangement with them.” In the wake of this, the merger of (Coastal Gujarat Power Limited) CGPL with TATA Power was completed last quarter with effect from 1st April 2020.

This will be India’s first 4000 MW private power project near Mundra Port, Gujarat and the thermal power plant will aid the country’s power needs by meeting 2 per cent of its power needs.

3. He shared that the power company’s “renewables business” has “delivered strong execution in the last quarter.” This comes from the fact that Tata Power has several large scale solar projects to its credit; to begin with, Tata Power Solar (TPSSL) has commissioned 600MW AC solar capacity including India’s largest floating solar power project in Kerala backwaters.

4. TPSSL’s “wins”  in this quarter have been recorded at “1.3GW of owned projects and 2.3GW of external orders aggregating 3.6GW of total large scale EPC contracts worth nearly ₹15,000 crore.” These are scheduled for completion in next 12 to 18 months.

5. However, there has been a downturn in the EPC business “due to higher commodity prices, including solar cells and modules and foreign exchange movements.” The margins, the CEO said, “will improve in coming quarters”. The downturn may be reversed, thanks to new orders and contract manufacturing while revealing that an MoU has been signed with Tamil Nadu government to invest approximately ₹3,000 crore for setting up a Greenfield 4GW solar cell and 4GW solar module manufacturing plant in Tirunelveli District of Tamil Nadu. Work is expected to start within a month on the plant.

Like many other EPCs, notably Sterling and Wilson Renewable Energy, Tata Power is also hoping it has put behind the losses incurred due to the volatility in module prices, and margins in the EPC business will recover going ahead. The firm has also entered into contract manufacturing deals with module makers whereby Tata Power will import the cells needed for module making, using the 155 difference in import duty between cells and modules to wring our more efficiencies in its sourcing.

6. “TATA Power’s new age business has also delivered promising results in this quarter as we achieved 4x and 2x growth, respectively, in rooftop solar and solar pump business in terms of revenue over Q1 of last year,” Dr. Sinha said. The margins in rooftop solar have tightened, he shared, which is attributable to commodity prices and the currency fluctuation. However, the company envisions growth here too.

7. In the EV space, TATA Power EZ Charge is forging new partnerships to create green mobility infrastructure in India. “We now have more than 240 E-bus charging points and around 2,400 public EV charging points across 437 cities, which is the largest EV network in the country. We have also signed MoUs with OEMs to enter into strategic partnerships to facilitate a robust EV charging network and accelerate the adoption of EVs across the country,” he traced the progress of the EV arm of Tata. “We have also entered an MoU with NAREDCO to set up around 5,000 charging stations across new construction project sites in Maharashtra,” he concluded.

8. The CEO seemed bullish about the implementation of renewable projects in the country, thanks to initiatives like green open access and increased trajectory of RPO by 2030 to 47%.”