JSW Energy CEO: Merchant volume surges 65% YoY so far in FY23

Prashant Jain, joint managing director and chief executive officer, JSW Energy

JSW Energy CEO and Joint MD Prashant Jain on January 23 said the company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin contracted by 18 percent in the December quarter, but its overall merchant volumes in the first nine months (April-December) of FY2023 increased by 65 percent compared to the same period in the previous fiscal.

The Sajjan Jindal-led power firm reported a 45 percent decline in its consolidated net profit at Rs 180 crore for the December 2022 quarter. The EBITDA for the quarter was 18 percent lower at Rs 727 crore vis-a-vis Rs 882 crore in the corresponding period of the previous year.

Reacting to the financial result, shares of the company declined six percent on Jan 23 to Rs 246.70 on BSE. It recovered a bit on Jan 24 rising 0.73 percent to Rs 248.5 at 11:24 AM IST.

In an exclusive interview with Moneycontrol, Jain said the profit margins shrunk in the third quarter because of low merchant sale volume. However, the CEO added that 83 percent of the company’s portfolio is in long-term power purchase agreements.

“We need to read the data on the absolute EBITDA basis, not on the EBITDA margin per se. The reason for the profit margin contracting primarily was merchant volumes. During the quarter (October-December), there were two things which happened. First, in October, the power demand was negative or almost flat as compared to the previous year when it was very robust. At that point in time, the power prices were ruling close to Rs 20 in FY 22. And this year, the power prices in the third quarter were on average Rs 4.35 – Rs 4.55. Whereas, fuel prices went up because of higher coal prices, which went up by 37%. Because of this, there was a lower merchant volume. So, one needs to take out the seasonality factor and see in totality,” he said.

Jain further said, “If you look at the year as a whole for the last nine months, our merchant volumes were up by 65 percent as compared to last year. Reason for that – for the first nine months, the power demand went up by 10 percent. For Q3 alone, the power demand went up by 6.4 percent. So that was the primary reason.”