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Subdued generation impacts earnings

Torrent Power (TPW) reported a 1.1% YoY decline in revenue to INR 65bn in Q4FY25, primarily due to weak generation performance while EBITDA rose slightly by 1.9% YoY to INR 11bn. PBT remains stable at ~INR 6.2bn. Generation revenue dropped 43% YoY to INR 12bn due to non-operation of the Unosugen and Dgen plants, and lower plant load factor (PLF) across gas, wind, and solar assets, while transmission & distribution (T&D) revenue grew 4% YoY to INR 58bn. TPW has an installed capacity of 4.8GW and aims to expand it to 7.9GW, backed by a 2.1GW renewable pipeline. It has signed a 40-year energy storage facility agreement with Maharashtra State electricity Distribution company (MSEDCL) for a 2,000MW and 16,000 MWh pumped hydro project at Raigad and is nearing completion of a pilot green hydrogen blending project in Uttar Pradesh, with 18 KTA green hydrogen production capacity allocated. We revise to Sell with a lower TP of INR 1,313 on a SOTP valuation.

Top line declines by 1% YoY: TPW posted revenue of INR 65bn, down 1.1% YoY, in Q4FY25. Employee cost increased 9.2% YoY to INR 1.6bn. EBITDA rose 1.9% YoY to INR 11bn. Depreciation went up 9.6% YoY to INR 3.9bn. Interest surged 1.2% YoY to INR 2.3bn. Other income climbed to INR 1.1bn vs INR 968mn in the past year. Reported PBT was stable at INR 6.19bn vs INR 6.17bn in the past year.

Weak generation drags performance: Revenue from generation fell 43% YoY to INR 12bn. T&D revenue increased 4% YoY to INR 58bn. Renewables revenue shrank 4% YoY to INR 2.5bn.Unosugen and Dgen plants were not operational in Q4FY25. PLF for Sugen was 12% vs 35% in the past year. PLF for Amgen was at 72% vs 96% last year. PLF for wind plants was 19% vs 21% in the past year. PLF for solar plants was 18% vs ~20% in the past year.

Operational capacity is estimated to grow to 7.9GW: The company currently has 2.1GW of RE capacity in the pipeline with a total expected project cost of INR 206bn. It has an installed capacity of 4.8GW, which it aims to scale up to 7.9GW. It has identified 8.4GW of pumped storage projects, which is in the planning stage across Maharashtra and UP. It has executed an energy storage facility agreement with MSEDCL for developing and supplying 2,000 MW and 16,000 MWh pump storage hydro power in the Raigad District for 40 years. A pilot hydrogen blending green hydrogen project in UP is nearing completion. TPW has been allocated 18 KTA of green hydrogen production capacity.

Revise to Sell with a lower TP of INR 1,313: We introduce FY28E earnings. We revise to Sell from Reduce and lower our SOTP-based TP to INR 1,313 from INR 1,397. We have revised our TP down on delay in commissioning its renewable projects.

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