Reliance Power has experienced a remarkable transformation, announcing significant profitability for the quarter ended December 31, 2024, effectively bouncing back from substantial losses reported during the same period last year. The Anil Ambani-led Reliance Group company declared a consolidated net profit of ₹41.95 crore for the October-December quarter, up from a staggering loss of ₹1,136.75 crore for Q3 FY24.
The green shoots of recovery became increasingly evident as Reliance Power also reported total income rising to ₹2,159.44 crore, marking an 8% increase compared to ₹1,998.79 crore during the previous year. This shift toward profitability has energized investor confidence, leading to substantial movements on the stock market.
On the back of these positive earnings, Reliance Power's shares surged by as much as 10%, hitting ₹43.94 on the National Stock Exchange (NSE) shortly after the announcement. The share price maintains momentum, with analysts noting encouraging trading activity, compared to the benchmark BSE Sensex, which was down by 0.4%. This surge reflects investors’ optimism, especially against the backdrop of achieving zero bank debt status, which means the company has eliminated all outstanding liabilities to banks.
While income has increased, Reliance Power has simultaneously managed to drastically reduce its expenditure, with total expenses dropping to ₹2,109.56 crore from ₹3,167.49 crore over the same period. This 33% decrease has played a pivotal role in enhancing the company’s bottom line, showcasing its commitment to efficient financial management. Importantly, the profit after tax was achieved even with revenue from operations slipping 4.6% to ₹1,852 crore compared to ₹1,943 crore from last year.
Despite the decline in revenues, Reliance Power's strategic focus on major projects continues to pay dividends. Their 3,960 megawatt (MW) Sasan Ultra Mega Power Project boasts notable operational efficiency, achieving an impressive plant load factor (PLF) of 93%. Similarly, the 1,200 MW Rosa Power Plant recorded exceptional availability at 97%, which significantly contributes to the overall productivity of the company’s extensive power generation portfolio.
The June quarter profitability was also aided by Reliance Power's earlier exemplary performance, particularly noticeable during the September quarter, where the company reported its Q2 FY25 earnings of ₹2,878.15 crore, fortified by one-time gains related to the deconsolidation of subsidiaries. This combination of prior successes and current operational improvements paints Reliance Power’s future in bright hues as it continues to navigate the turbulent waters of the energy sector, investing heavily in renewable resources.
Reliance Power's achievements are not merely confined to financial metrics. The company is actively pursuing regulatory compensation related to foreign currency fluctuations and changes inherent to direct normal irradiance (DNI). Their subsidiary, Reliance NU Suntech Private Ltd, recently secured what will potentially be Asia’s largest solar and battery energy storage system project from the Solar Energy Corporation of India. This project involves 930 MW of solar capacity coupled with 1,860 megawatt-hour battery storage. "The project would be Asia's largest solar and battery storage project at a single location," said Reliance Power.
Stock analysts have noted Reliance Power as possessing low volatility, reflected by its beta of 0.9. The relative strength index (RSI) is presently at 49.5, indicating the stock is neither overbought nor oversold. Observers point out the stock’s recovery pattern, including its 239% gain over the past two years, prompting constructive debate about its position within the renewable energy sector as its plans materialize.
Turning to market signals, indications from technical analysts suggest cautious optimism. Reliance Power’s stock appears primed for stability based on moving averages and breakout trends from symmetrical formations, with forecasts estimating upward potential reaching ₹46 short term, possibly revising the price band higher thereafter.
Overall, this quarter’s results represent not only Reliance Power's ability to successfully maneuver through challenges but also signify its strategic repositioning for future growth. The company’s zero debt status and proactive project selections stand as testaments to its endeavors to maintain profitability and relevance within the dynamic energy sector. Reliance Power is now making substantial strides, seemingly well on its way to solidifying its status as one of India’s foremost private sector power generation companies.