Since February 1, shares of the integrated energy utility have risen 26 percent, compared with a 1 percent rise in the S&P BSE Sensex.
according to a Reuters report, Torrent Power has surpassed Reliance Industries to emerge as the lowest bidder for the supply of 1,090 megawatts of gas-fired power supply sought by the Indian government to meet record demand anticipated in the summer. READ MORE
Torrent Power quoted Rs 13.70 per unit price to supply 770 megawatts each for 45 days in April and May from two of its gas-fired projects in the western state of Gujarat, the news agency reported, citing sources.
The tender was conducted by NVVN Ltd, the power trading arm of India's largest power producer, NTPC Ltd. NVVN Ltd, on instructions from the ministry of energy, had invited bids for the power supply of 5,000 megawatts of gas-fired power plants.
According to the offer documents, NVVN will purchase the power from the successful bidder from April 10 to May 16, 2023. The company will sell the power on the spot markets to increase power availability. The Federal Ministry of Energy will cover insufficient recovery through its Electric System Development Fund (PSDF).
Torrent Power, the Rs 14,258 crore integrated power company of the Rs 23,500 crore Torrent Group, is one of the largest companies in the country's energy sector with a presence across the entire energy value chain: generation, transmission and distribution.
Given its healthy balance sheet and strong performance from its licensed and franchised distribution segments, along with PLF improvements for both generation segments, Geojit Financial Services analysts expect Torrent Power's earnings to improve.
The distribution businesses anticipate higher productivity as a result of declining transmission and distribution (T&D) losses and expansion ambitions to boost the top line. For fiscal year 25, the brokerage firm anticipates a 28 percent increase in renewable capacity, driven by increased capacity.
"With the expected drop in gas prices, we believe that the efficiency of gas plants will improve, resulting in higher profitability. The company is expected to maintain a debt/equity ratio of 0.7x in FY25, vs. to 0.9x in FY23, and an ROE of 16 percent in FY25," Geojit Financial Services said in a recent hedge initiation report.
The brokerage firm has given Torrent Power an 'Accumulate' rating and a Rs 550 price target based on a multiple of 1.62x FY25 P/Bk.
