Torrent Power is one of the leading companies in the Indian power sector, which is promoted by the Rs 17,000 crore/USD 2.78 billion Torrent Group. The group is committed to its mission of transforming lives by serving two of the most critical needs — healthcare and power. Torrent Power is an integrated power utility provider and one of the largest private sector players in the country, having interests in power generation, transmission, manufacturing and distribution along with the supply of power cables. The company foresaw the lucrative prospect in the power sector much before liberalisation, when it took over and successfully turned around an ailing power cable company, renaming it as Torrent Cables Ltd. This company was later merged with Torrent Power Limited in 2014. The high points of Torrent’s foray into the power sector have been the acquisition of two of the country’s oldest utilities, Surat Electricity Company Ltd and Ahmedabad Electricity Company Ltd. Torrent has turned them into first rate power utilities in terms of operational efficiencies and reliability of power supply. Torrent ranks amongst the best run power utility company in the country with highly efficient generation assets. Its portfolio consists of coal based, gas based and renewable power plants along with wind power plants. The company distributes power to over 3 million customers in Ahmedabad, Gandhinagar, Surat and Dahej in Gujarat, at Bhiwandi in Maharashtra and Agra in Uttar Pradesh. The transmission and distribution loss incurred by the company is amongst the lowest in the country.
The power sector is a part of the infrastructure segment and fulcrum of economic development in any country and thus the present government has identified the power sector as a key focused sector to promote sustained industrial growth. Emphasis on Make in India, coupled with the government’s focus to attain power for all is expected to accelerate the power demand in the country. The company posted stellar Q4 FY2017-18 financial results, with revenue from operations at Rs 2,810 crore and EBDIT at Rs 789 crore, as against Rs 2,433 crore and Rs 743 crore, respectively for the same period as of last year. Whereas, the consolidated revenue from operations for the full FY 2017-18 stood at Rs 11,512 crore as against Rs 10,000 crore for FY 2016-17. Even the EBDIT for FY2017-18 was up smartly at Rs 3,380 crore as against Rs 2,651 crore for FY2016-17. The positive numbers for FY2017-18 were due to reduced finance costs on account of reduction in rate of interest on term loans, significant reduction in AT&C losses at distribution franchisee business and higher operational capacity of renewable power plants. The Torrent Power stock, currently quoting at Rs 265, is a strong fundamental buy for medium term investment, with a price target of Rs 330 in one year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.