Shares of Torrent Power soared by 9% on Tuesday, climbing to ₹1,985, following the company’s announcement of a major contract win with the Maharashtra State Electricity Distribution Company Ltd (MSEDCL). This deal involves the long-term supply of 2,000 MW of energy storage capacity, marking a significant achievement for the energy firm.
For those involved in share market investment, this development could represent a strong performance in the sector.
Major contract with MSEDCL boosts Torrent Power shares
Torrent Power’s share price surge can be attributed to its receipt of a letter of award from MSEDCL. The award relates to the upcoming InSTS Connected Pumped Hydro Storage Plant and secures 2,000 MW of energy storage capacity for the company. This contract follows an earlier letter of intent issued by MSEDCL on 17 September 2024, which originally allocated 1,500 MW. The recent allotment of an additional 500 MW brings Torrent Power’s total energy storage capacity to 2,000 MW.
A 40-year deal with substantial energy output
The contract, part of a 40-year Energy Storage Facility Agreement (ESFA), will see Torrent Power providing MSEDCL with energy storage services for an extended period. Under the agreement, the energy storage plant, which will be based in Maharashtra, is expected to deliver up to 8 hours of scheduled discharge daily, with a maximum continuous output of 5 hours. The plant will utilise input energy provided by MSEDCL for charging, ensuring a reliable supply of stored energy when required.
Torrent Power’s growing energy portfolio
Torrent Power has consistently demonstrated its growth potential, with its installed generation capacity reaching 4.4 GWp as of 30 June 2024. The company’s power generation comes from a diversified portfolio that includes gas-based, renewable, and coal-based energy sources. Additionally, Torrent Power has 3.1 GWp of renewable energy projects currently in development, reinforcing its position in the renewable energy market.
Strong financial performance
Torrent Power’s financial performance has been equally impressive. In the first quarter of the current fiscal year (Q1FY25), the company recorded an 87.2% year-on-year increase in net profit, amounting to ₹996.3 crore. Revenue from operations also rose by 23.3% year-on-year, totalling ₹9,033.7 crore in the same period.
At the operational level, earnings before interest, tax, depreciation, and amortisation (EBITDA) surged by 57%, reaching ₹1,857.9 crore. This growth has improved Torrent Power’s EBITDA margin to 20.6%, up from 16.2% in the previous fiscal year.
Investor interest and outlook
By mid-morning on Tuesday, Torrent Power shares were trading at ₹1,958, reflecting an 8% increase compared to the previous day’s close on the National Stock Exchange (NSE). This surge in the company’s share price, alongside its strong financial performance and growing energy capacity, suggests positive momentum for investors interested in share market investment.
Torrent Power’s stock has rallied by an impressive 110% since the start of the year, reinforcing its position as a key player in India’s energy sector. As the company continues to expand its renewable energy capacity and secure high-value contracts, it is likely to attract further attention from investors looking for growth in the energy market.
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