JSW Energy gained from a revival in demand and better prices in the September quarter. India's power demand went up by 13% in the September quarter, and in October so far, it is already up 19%, the company's Joint MD and CEO Prashant Jain told CNBC-TV18 in a post-earnings call.

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Increased government spending, capital expenditure in new projects, particularly in the renewable energy space, and recent capacity acquisitions have helped boost the profits of the Sajjan Jindal-led company.

"Power demand is quite robust...we feel that merchant tariffs will be elevated,” Jain said.

The rates for merchant power -- electricity sold in the open market -- jumped to ₹5.9 per unit in the financial year 2023, from ₹4.4 a unit in the previous year. Merchant power capacity at 1,300 MW is nearly 15% of JSW's total capacity and therefore, improving merchant power realisation means better profitability.

On Friday (October 20), the company reported an 85.6% YoY jump in its second-quarter net profit to ₹850.2 crore from ₹465.7 crore last year.

However, Jain pointed out that a spike in oil prices is exerting tremendous cost pressures and it may be tough to predict how realisations and profits will play out.

“With the oil inching to $95, the coal prices have already shot up $135...that is also putting a lot of cost pressure overall, and there are the inflationary pressures globally, and all that is putting pressure on the energy. Because of all these reasons the prices of merchant power will be elevated. But we don't know what kind of profitability it will entail to the companies who are in the merchant sales,” he said.

Read Here | World oil, gas, coal demand to peak by 2030: International Energy Agency

Talking about the contribution of Ind-Bharath that JSW recently acquired, Jain said that its contribution will be a little higher than the two existing plants, which operate on imported coal. Ind-Barath uses domestic coal and it is situated in the coal belt, which means nearly 40-50% lower fuel costs.

Jain expects the thermal business to remain relevant for the next one or two decades, dispelling notions of its imminent obsolescence.

JSW Energy plans to add approximately 6.2 gigawatts of renewable capacity over three to six years. To support the green steel initiative, they will require substantial green hydrogen production capacity, renewable capacity, and storage applications, with a goal to achieve these by 2030.

Shares of JSW Energy were down around 4% at ₹359.35. The stock has declined more than 14% over the past month.

(Edited by : Shweta Mungre)

First Published:Oct 25, 2023 1:10 PM IST