JSW Energy reported an annual increase of 37 percent to Rs 466 crore in the September quarter mainly on the back of higher revenues but its margin shrank following the recent fuel price hike.

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Joint Managing Director and CEO Prashant Jain on Monday told CNBC-TV18 the firm’s margins have gone down but they are reflective of fuel price that has gone up.

“Fuel price is a pass-through and fuel prices have gone up by more than 120 percent – that is why EBITDA margin, as a percentage of sales revenue, will be looking contracted. But actually, EBITDA is not contracted and that is why in absolute terms EBITDA is up 2 percent in spite of the lower volume,” he explained.

JSW Energy Q2 | #2QWithCNBCTV18

▶️Net profit up 37.3% at Rs 465.7 cr vs Rs 339.2 cr (YoY)▶️Revenue up 14.4% at Rs 2,387.5 cr vs Rs 2,087.5 cr (YoY)▶️EBITDA down 4.3% at Rs 889.6 cr vs Rs 929.8 cr (YoY)▶️Margin at 37.3 % vs 44.5% (YoY) pic.twitter.com/Fzs3T5Zvyn— CNBC-TV18 (@CNBCTV18Live) October 28, 2022

JSW Energy’s top boss noted that the overall Indian merchant market volumes were muted in the second quarter of the fiscal. “We saw power demand moderated to 5.7 percent during the quarter, whereas in the previous quarter, the power demand grew at 18 percent and that was also reflected in the lower volume in the merchant market. The overall Indian merchant market was down by 18 percent in Q2 and price also moderated to Rs 5.7 per unit,” he said.

According to Jain, it is not viable for energy generators to pump in higher volumes at the moment as coal prices are still running pretty high at $330 because of which the fuel price for power generation is pretty high at Rs 5.70.

The company currently has 14-15 percent open capacity, which it is open to tying up, Jain said. “Power is predominantly a long-term supply agreement business and that is what we have been doing. At one point in time, we were having more than 60 percent power in the merchant market and today, we are having only 14-15 percent open capacity, which we would like to tie up in due course of time,” he said.

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JSW Energy has set the target to achieve a 10-gigawatt capacity by FY25 and 20 gigawatt capacity by FY30. “But we have already logged in the capacity for 10 gigawatts. We are going to complete that in the next 18-20 months’ timeframe. So we are going to achieve our FY25 guidance, probably a one-one-and-a-half year earlier.”

Jain added that the company’s receivables at 66 days, though down 19 percent, are still healthy and better compared to the sector.

He also said that the company is looking to close the Mytrah acquisition in the October to December quarter and expects to gain Rs 300-400 crore of synergy benefits from it.

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(Edited by : Kanishka Sarkar)