Better merchant tariff to boost JSW Energy's earnings in second half
The company sells power in the merchant market and in the second half of the fiscal it expects the merchant tariffs to remain stable.
By Jwalit Vyas, ET Bureau | Updated:
MUMBAI: JSW Energy's second quarter earnings were mainly driven by foreign exchange gains, lower fuel cost and increase in volumes aided by stable merchant tariffs. The company reported a profit of Rs 252 crore as against an expectation of Rs 200 crore. Out of this Rs 94 crore was on foreign exchange gains.
The company sells power in the merchant market and in the second half of the fiscal it expects the merchant tariffs to remain stable. For fuel the company mainly imports coal and fuel cost is equal to 70% of the company's sales.
Given this, the company's earnings will mainly depend on the foreign exchange rates. According to a JM Financial's report, assuming a stable coal price change in USD/INR by 1 will have an impact of 8-9%. Rupee is in the upward trend and has gained Rs 3 in the last one month.
On the sales front, the company is seeing high capacity utilization and an upward trend in the merchant tariffs. Capacity utilization for its Vijaynagar and Ratnagairi plant was at 100% and 90%, which was quite high. And the merchant rate realisation was Rs 4.6 per unit as compared to Rs 3.9 per unit in the corresponding quarter last year and Rs 4.4 per unit in the June quarter.
Considering this, the net profit in the second half will be better than the first half.
The company sells power in the merchant market and in the second half of the fiscal it expects the merchant tariffs to remain stable. For fuel the company mainly imports coal and fuel cost is equal to 70% of the company's sales.
Given this, the company's earnings will mainly depend on the foreign exchange rates. According to a JM Financial's report, assuming a stable coal price change in USD/INR by 1 will have an impact of 8-9%. Rupee is in the upward trend and has gained Rs 3 in the last one month.
On the sales front, the company is seeing high capacity utilization and an upward trend in the merchant tariffs. Capacity utilization for its Vijaynagar and Ratnagairi plant was at 100% and 90%, which was quite high. And the merchant rate realisation was Rs 4.6 per unit as compared to Rs 3.9 per unit in the corresponding quarter last year and Rs 4.4 per unit in the June quarter.
Considering this, the net profit in the second half will be better than the first half.
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