Torrent Power Limited, a name synonymous with excellence in the Indian energy sector, has seen remarkable growth in recent years. With a market capitalization of ₹57,798 crore, this energy giant has evolved from its humble beginnings as a textile unit into a diversified power conglomerate. This article takes you through Torrent Power's journey, its business segments, financial performance, key metrics, peer comparison, shareholding, and a SWOT analysis to understand the company's future potential.
A Journey from Textiles to Energy
Founded in 1956, Torrent Power's transformation from textiles to energy began when it ventured into the power sector in 2011-12 by acquiring Mahendra Electricals and renaming it Torrent Cables Limited. Over the years, Torrent Power has built an installed capacity of more than 4.4 GW across various energy sources, including thermal, gas, and renewable energy. With a consumer base of over 5.2 million across six states—Gujarat, Maharashtra, Madhya Pradesh, Uttar Pradesh, Chhattisgarh, and Dadra & Nagar Haveli—Torrent Power is a pioneer in power distribution reforms in India.
Business Segments: Powering India’s Growth
Torrent Power operates through various segments, making it one of the most diversified players in the energy market.
1. Thermal Power: Torrent Power boasts a thermal generation capacity of 3,092 MW, which includes gas-based plants at Sabarmati, Dahej, and Surat (2,730 MW) and a coal-based power plant at Sabarmati (362 MW). The company benefits from long-term Power Purchase Agreements (PPAs) with utilities, ensuring optimal fuel utilization.
2. Renewable Energy: Torrent Power has aggressively expanded into solar and wind power. Its solar generation portfolio currently stands at 263 MW, with 350 MW more under development. The company also has 920 MW of operational wind power capacity, with an additional 425 MW under development, signaling a strong commitment to renewables.
3. Transmission Infrastructure: Torrent Power operates 355 circuit km of 400 KV and 128 km of 220 KV transmission lines. These lines are critical for power evacuation from its gas-based plants.
4. Distribution: As Torrent Power’s largest segment, it distributes over 19 billion units of power to 3.6 million customers across Gujarat and franchise areas such as Agra, Bhiwandi, and Shil-Mumbra-Kalwa. The company is renowned for its loss reduction efforts and high retail supply uptime, contributing to its operational success.
Financial Performance: A Remarkable Turnaround
Torrent Power’s financials have shown impressive growth over the last fiscal year. The company reported a revenue of ₹26,076 crore in FY23, and its profit before tax surged by 438%, reaching ₹3,041 crore from ₹564 crore in FY22. The return on equity (RoE) saw a dramatic increase to 15.2% in FY23, up from 3.89% in FY22, driven by increased RLNG sales. The debt-to-equity ratio, although rising to 0.86 in FY23 (from 0.76 in FY22), remains manageable given the company's consistent profitability.
| Indicator |
CAGR 3 Yrs |
CAGR 5 Yrs |
TTM |
Mar '24 |
Mar '23 |
Mar '22 |
Mar '21 |
Mar '20 |
| Total Revenue |
30.8% |
15.6% |
29224.2 |
27527.5 |
26076 |
14492.7 |
12314.5 |
13818.2 |
| Operating Expenses |
37.5% |
17.9% |
23657 |
22624 |
20935.5 |
10666.6 |
8707.4 |
10084.6 |
| Operating Profit |
9.6% |
7.3% |
5232.3 |
4559.2 |
4758.7 |
3591 |
3465.2 |
3556.1 |
| Operating Profit Margin % |
-16.2% |
-7.1% |
|
16.56% |
18.25% |
24.78% |
28.14% |
25.73% |
| Total Expenses |
32.3% |
15.6% |
|
24944.9 |
23034.6 |
12628.7 |
10762.7 |
12343.4 |
| EBIDT |
10.8% |
7.7% |
|
4903.5 |
5140.5 |
3826 |
3607.1 |
3733.7 |
| Interest |
6.7% |
1% |
976.2 |
943.4 |
818.2 |
628.2 |
775.7 |
954.6 |
| Depreciation |
2.5% |
2.3% |
1405 |
1377.5 |
1281 |
1333.9 |
1279.6 |
1304.3 |
| Profit Before Tax |
18.5% |
15.4% |
3186 |
2582.6 |
3041.4 |
564 |
1551.8 |
474.8 |
| Tax |
39% |
13.8% |
825.9 |
686.6 |
876.7 |
105.3 |
255.9 |
-704 |
| PAT Before ExtraOrdinary Items |
13.5% |
16% |
|
1896 |
2164.7 |
458.7 |
1295.9 |
1178.9 |
| Net Profit |
12.4% |
15.3% |
2288.2 |
1833.2 |
2117.4 |
454 |
1290.9 |
1174.2 |
| Net Profit Margin % |
-13.2% |
0.3% |
|
6.97% |
8.42% |
3.21% |
10.64% |
8.64% |
| EPS |
12.3% |
15.3% |
|
38.1 |
44.1 |
9.5 |
26.9 |
24.4 |
Key Metrics
| Key Metrics |
Value |
Key Metrics |
Value |
| Market Capitalization |
88568.1 |
Net Profit Qtr Growth YoY % |
88 |
| TTM PE Ratio |
38.7 |
Net Profit TTM Growth % |
7.3 |
| TTM PEG Ratio |
5.3 |
Operating Profit Margin Qtr % |
20.6 |
| Price to Book Ratio |
7 |
Operating Profit Margin TTM % |
18.1 |
| Institutions holding % |
36.66 |
Relative returns vs Nifty50 quarter % |
19.8 |
| Revenue Growth Qtr YoY % |
23.3 |
Relative returns vs Sector quarter% |
23.4 |
| Revenue Growth (TTM) |
9 |
ROE Annual % |
15.2 |
| Piotroski Score |
5 |
RoA Annual % |
5.5 |
Peer Comparison
Torrent Power faces competition from leading players in the energy sector like NTPC Limited, Tata Power, and Adani Power. Here's a quick comparison:
| Stock |
Current Price |
PE TTM Price to Earnings |
Market Capitalization |
Dividend yield 1yr % |
Net Profit Qtr |
Net Profit Annual YoY Growth % |
Operating Revenue Qtr |
Revenue Growth Qtr YoY % |
Price to Book Value |
| Torrent Power Ltd. |
1842.8 |
38.71 |
88568.06 |
0.87% |
972.24 |
-13.42% |
9033.73 |
23.28% |
7.03 |
| NTPC Ltd |
412.15 |
18.11 |
399648.09 |
1.88% |
5274.59 |
23.06% |
44696.3 |
-0.64% |
2.42 |
| Power Grid Corporation |
320.55 |
18.99 |
298130.85 |
3.51% |
3723.92 |
1.01% |
11006.18 |
-0.38% |
3.42 |
| Adani Green Energy L.. |
1635.1 |
229.61 |
259005.15 |
0.00% |
276 |
12.94% |
3055 |
37.61% |
16.16 |
| Adani Power Ltd. |
592.3 |
17.96 |
228446.49 |
0.00% |
3331.8 |
94.18% |
13338.88 |
2.68% |
6.42 |
| Tata Power Company Ltd. |
425.4 |
36.79 |
135929.74 |
0.47% |
970.91 |
10.78% |
17293.62 |
13.67% |
3.55 |
| JSW Energy Ltd. |
683.3 |
61 |
119425.02 |
0.29% |
853.25 |
16.58% |
3237.66 |
-0.67% |
5.67 |
Torrent Power's RoE outshines most of its peers, indicating its strong profitability. However, its market cap and installed capacity are smaller than its competitors like NTPC and Adani Power.
Shareholding Pattern (as of Q2 FY24)
| in % |
Jun'22 |
Sep'22 |
Dec'22 |
Mar'23 |
Jun'23 |
Sep'23 |
Dec'23 |
Mar'24 |
Jun'24 |
Sep'24 |
| Promoter |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
53.57 |
| Public Shareholding |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
46.43 |
| Institutions |
29.44 |
29.45 |
29.51 |
29.41 |
29.18 |
29.26 |
29.22 |
29.34 |
29.42 |
36.66 |
| Non-Institutions |
17 |
16.99 |
16.93 |
17.03 |
17.25 |
17.18 |
17.22 |
17.09 |
17.01 |
9.77 |
The high promoter stake indicates a strong commitment from the founding family, while the presence of institutional investors showcases confidence in the company’s growth potential.
SWOT Analysis
| Strengths |
Weaknesses |
| - Diverse Power Generation Portfolio: Torrent Power has a well-rounded energy portfolio spanning thermal, solar, wind, and gas, making it resilient to fluctuations in a single energy source. |
- Dependence on Gas and Fuel Prices: The company’s gas-based generation segment is heavily influenced by fluctuating fuel prices and global geopolitical conditions, impacting profitability. |
| - Strong Distribution Network: Torrent Power serves over 5.2 million consumers across key states in India, with proven expertise in power distribution and loss reduction, particularly in challenging urban areas. |
- Regulatory Risks in Distribution: Torrent faces regulatory challenges in distribution, including delayed cost recovery and potential revenue losses due to government reforms allowing multiple licensees in the same region. |
| - Commitment to Renewable Energy: The company’s strategic investment in renewables aligns with India’s green energy goals, positioning it well in the growing market for clean energy solutions. |
- High Capital Requirements: Torrent’s expansion plans and energy projects require significant capital, leading to increased debt, as reflected in its rising debt-to-equity ratio, which could strain its financial flexibility. |
| Opportunities |
Threats |
| - Expansion of Renewable Portfolio: Torrent’s plans to scale solar, wind, and hybrid power capacities, along with upcoming hydro projects, align with India’s push for renewable energy, creating potential for revenue growth. |
- Intense Competition in Power Distribution: With government initiatives promoting competition in distribution, Torrent may face challenges from new entrants and may need to increase operational efficiencies to maintain market share. |
| - Geographic and Customer Expansion: The company is well-positioned to secure more franchise opportunities in power distribution, allowing access to new regions and customers in urban and industrial areas. |
- Policy and Regulatory Changes: Torrent’s operations are subject to regulatory changes in energy policy and tariffs, which may impact its revenue and profitability, especially in states with strict price controls or policy shifts. |
| - Privatization of Power Distribution: With increased government interest in privatizing power distribution, Torrent can leverage its experience to expand its footprint through new licenses and public-private partnerships. |
- Operational Challenges in Renewables: Torrent’s renewable projects face risks such as land acquisition delays, supply chain issues, and variable state payment timelines, which could affect project timelines and revenue realization. |
Future Prospects: Eyeing Renewables and Expansion
Torrent Power’s future strategy is clear—focus on expanding its renewable energy portfolio while improving operational efficiencies in transmission and distribution. The company’s foray into large-scale solar and wind projects, combined with its efficient transmission and distribution network, positions it well for sustainable growth. Torrent Power’s investment of ₹47,350 crore in Gujarat and hydropower projects in Maharashtra will likely drive its next phase of expansion.
Conclusion
Torrent Power has come a long way from its textile roots to become a formidable player in India’s power sector. With robust financials, a diversified portfolio, and a clear focus on renewable energy, Torrent Power is well-positioned for growth. However, the company must navigate challenges such as fuel price volatility and regulatory risks to maintain its upward trajectory.
With strong fundamentals and promising prospects, Torrent Power could continue to be a beacon in India's rapidly evolving power landscape.
What do you think? Are you bullish on Torrent Power’s future? Let us know your thoughts in the comments!
Discalimer!
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