As power companies prepare to unveil their fourth-quarter financial results, the spotlight is shining brightly on the renewable energy sector. Analysts predict that the growth in renewable energy capacity will play a pivotal role in shaping these earnings. Notably, the addition of 8.4 GW of new capacity in January and February marks a significant uptick, signaling a promising trend for the sector.

Surge in Electricity Demand

In the fourth quarter, electricity consumption soared to approximately 417 billion units (BUs), reflecting an annual increase of over 4%. Additionally, peak power demand reached 238 GW, which is a notable rise of more than 6% year-on-year. This uptick in demand indicates a robust market for power companies.

• Key Growth Drivers:
  • Expansion of regulated equity through new capacity.
  • Additional transmission lines.
  • Improved hydroelectric generation.
  • Continued growth in short-term market volumes.
  • Contributions from solar engineering, procurement, and construction (EPC), along with rooftop installations.

Tata Power’s Strong Position

Tata Power is set to see favorable earnings from its renewable energy segment, bolstered by a higher capacity base and effective execution at Tata Power Solar. Analysts from Kotak predict that losses at the Mundra thermal plant will be contained, thanks to its operation under a cost-plus tariff model during this quarter.

JSW Energy’s Expansion

JSW Energy is anticipated to generate 7.4 billion units in Q4, marking a 16% increase year-on-year. This growth is attributed to contributions from Ind-Barath Power Infra, new renewable assets, and the recent acquisition of the 1,800 MW KSK Mahanadi Power Company. The company’s recent purchase of the 4.7-GW O2 Power platform is expected to accelerate its journey towards achieving a 20-GW generation target ahead of schedule.

Suzlon’s Promising Outlook

Suzlon, a significant player in the wind turbine market, has been included in Motilal Oswal’s model portfolio. The company is projected to ramp up its execution from 710 MW in FY24 to 1.4 GW in FY25, with further growth anticipated to reach 2.5 GW and 3.4 GW in FY26 and FY27, respectively.

Financial Projections for Q4

While power companies are poised for strong revenue growth, profit increases may be modest or even lower in Q4:

• JSW Energy: Estimated profit of ₹288 crore, reflecting an 18% decline, while revenue is expected to rise 29% to ₹3,549 crore.
• NTPC: Analysts foresee a slight drop in generation of -2% year-on-year, with modest profit after tax (PAT) growth projected at over 6%, due to limited capacity additions this financial year.
• Suzlon: Expected to achieve a profit of ₹467 crore, an impressive 84% increase year-on-year, with revenue anticipated to reach ₹3,709 crore, up 70%.

In summary, as the renewable energy sector continues to grow, power companies are gearing up for a promising future, driven by increased capacity, strategic acquisitions, and rising electricity demand. The upcoming financial results are eagerly awaited as they will provide further insights into the industry’s performance and potential.