Reliance Power, part of Reliance ADAG Group has registered 38% growth in consolidated net profit to Rs 351.81 crore for the quarter ended Dec 2015. Strong growth at bottom-line was to do with strong operating performance where the sales was up by 48% (to Rs 2562.21 crore) and operating profit margin expand by 1170 bps to 48%. Thus the operating profit was up by 96% to Rs 1229.68 crore. But with interest, depreciation more than double the growth at PBT moderated to 45% to Rs 455.33 crore. After accounting for higher taxation (up 71% to Rs 103.52 crore) the PAT was eventually higher by 38% to Rs 351.81 crore.

• Strong growth in revenue for the quarter is largely due to contribution from Sasan UMPP. Excluding Sasan UMPP the generation of other two power plants i.e. Butibori and Rosa TPP put together was down by 25% for the quarter ended December 2015. The power generation of Sasan UMPP stood at 8158 million units in Q3FY16. Thus the gross generation from operating plants for Q3FY16 stood increased to 10548 million units as against 3167 million units in Q3FY15.
• Expansion in operating profit margin (by 1170 bps to 48%) was largely on account of lower fuel cost. The cost of fuel as proportion to sales has declined sharply by 1950 bps to 40.3%. Lower fuel cost seems largely on account of increase in consumption of captive coal from its own mines and external as well as lower coal prices in general. But other cost heads witnessed significant increase limiting the benefit of fall in fuel cost. The employee cost was up by 100 bps to 1.7%. The other expenses were higher by 670 bps to 10%.
• Other income was lower by 9% to Rs 103.47 crore. The interest cost was higher by 123% to Rs 600.34 crore and depreciation was up by 101% to Rs 277.48 crore. Higher interest cost and depreciation was due to incremental capacity coming on stream. Thus the growth at PBT was up 45% to Rs 455.33 crore.
• The taxation for the quarter was up 71% to Rs 103.52 crore. Thus the net profit eventually stood higher by 38% to Rs 351.81 crore.

Nine month performance

Sales were up by 54% to Rs 8096.10 crore. Higher sales together with expansion in OPM to 44.7% from 35.3% in corresponding previous period, the operating profit was up by 95% to Rs 3620.44 crore. But restricted by higher depreciation, interest cost and higher taxation, the PAT was eventually higher by just 39% to Rs 1041.79 crore.

Other developments

The settlement activities in relation to the implementation of the power purchase agreement for Tilaya UMPP, with various procurers are in progress. The parent company has written off expenditure of Rs 131.75 crore in the statement of profit and loss taken over as part of the settlement process for TUMPP. The said expenditure being exceptional, in the opinion of the Board, has been offset by withdrawal of corresponding general reserve. Consequently there is no impact of the write-off of the expenses on the PBT for the quarter or nine month ended Dec 2015.

The stock hovers around Rs 48.95.