Utilities & Power Equipment : 4QFY25 - Largely flat performance with subdued demand by JM Financial Services
4QFY25: Largely flat performance with subdued demand
Power generation utilities are likely to report a modest performance in 4QFY25 driven by subdued energy/peak demand due to the extended monsoon in FY25. Fuel (coal) production and prices also remained soft in India as well as globally. During 4QFY25, merchant power prices (INR/kWh) also moderated to 4.4 vs. 4.9 during 4QFY24. Only, JSW Energy is likely to show growth momentum due to acquisitions; however, its merchant earnings will decline. Power equipment players BHEL, Suzlon and INOX Wind are likely to report good results as execution of their strong order book accelerates.
* Power demand: Energy demand / Peak demand in FY25 stood at 1,696BU/250GW, 4.3%/ 2.7% YoY (vs. 592BU / 1,626BU and 88GW / 243GW in FY05/FY24) due to the extended monsoon in FY25.
* Coal/Gas prices: Indonesian coal prices softened to avg. USD 87/MT (-7% QoQ,-8% YoY), while gas prices were range-bound at USD 13–15/mmBtu.
* Generation & PLF: Power generation stood at 446BU (4% YoY) including 23BU of hydropower (20% YoY) and 62BU of renewables (16% YoY). In 4QFY25, PLF of coal / gas-based plants stood at 72.3%/ 9.2% vs. 71.7%/ 13.6% in 4QFY24.
* Capacity addition: Thermal/ Hydro/ Wind/ Solar capacity addition in 4QFY25 was 2,559MW/ 760MW/ 1,875MW/ 7,782MW respectively.
Our coverage universe:
* NTPC is expected to report a flat quarter with revenue of INR 475bn in 4QFY25 and EBITDA of INR 142bn as increase in generation will be offset by lower realisation.
* JSW Energy’s revenue is likely to increase 4% YoY due to higher thermal generation in 4QFY25 led by incremental contribution from Ind-Barath plant and KSK Mahanadi.
* Tata Power’s net sales could remain at INR 160bn, 1% YoY. EBITDA margin is expected around 22.2%
* We expect Power Grid to report net sales of INR 122bn and EBITDA margin of 85.1%.
* Torrent Power may report a decline in revenue of -6% YoY at INR 61bn due to lower generation in its gas-fired plants.
* Coal India is expected to report revenue of INR 371bn (-1% YoY) due to lower dispatches. However, EBITDA is expected to be at INR 120bn (6% YoY).
* CESC is expected to report 10% YoY increase in revenue due to higher generation and higher demand in its distribution circle.
* We expect NHPC to report sales of INR 19bn, 2% YoY with EBITDA margin of 50%.
* SJVN sales are expected to increase by 14% YoY due to expected increase in generation by 10% YoY.
* ACME Solar is expected to report revenue of INR 4.5bn with EBITDA margin of 89%.
* BHEL’s net revenue could increase by 29% YoY driven by robust order book in power segments and pick-up in execution.
* Suzlon’s net revenue may increase at least 56% YoY on account of higher dispatches.
* Inox Wind’s revenue is expected to grow by 2.3x YoY at INR 12.2bn supported by robust execution.
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