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Indian Energy Exchange announces audited financial results for the fourth quarter and year ended March 31, 2020.
The results state that All India electricity demand bounced back in Q4 FY’20 with a 1.6% YoY growth after a decline of 5.9% in Q3 FY’20. The first two months in the quarter – Jan and Feb, witnessed a demand growth of 7.7% YoY. March began with positive growth, however, COVID-19 related preventive lockdown led to a 9.2% YoY decline in demand during the month. From a full-year FY’20 perspective, the power sector was characterized by muted electricity demand growth of 1.3% YoY, for the first time since FY’14 as we faced headwinds on account of several unprecedented developments related to economic and industrial growth slowdown as well as weather-related changes. India’s total installed power capacity reached 370 GW as on March 31, 2020, with renewable energy comprising 24%.In line with India’s commitment to the Paris Agreement to increase the share of green energy in the overall energy mix, the renewable capacity grew 12% YoY in the fiscal year 2020 and reached 87GW as on March 31, 2020, whereas thermal capacity increased only 2% YoY. On DISCOM relief, the Finance Minister announced a 90,000 Cr liquidity injection on 13th May 2020. This is a welcome step for financially stressed DISCOMs. In our view, the measures like PFC/ REC loans, rebates, and reforms announced by the Central Government will create the much-needed financial liquidity in the power sector value chain.
Additionally, on the policy and regulatory front, in April 2020 the Ministry of Power issued Draft Electricity Bill 2020. The key amendments proposed in the Bill relate to open access charges, distribution reforms, proposal to set up a new authority to adjudicate contracts enforcement and related disputes, promotion of renewable energy, stricter penalties, enforcement of payment security mechanism for generating companies, etc. These measures once implemented will help address several operational challenges being faced in the electricity value chain.
On a standalone basis, in Q4 FY’20 PAT at Rs. 47.2 crores was up 25% as compared to Rs. 37.8 crores in Q4’19; revenue for the quarter was up 17% YoY largely on account of the increase in overall volumes. PAT margin at 59%, was up from 56% a year ago. Starting Q3’20, the company started consolidating results of its wholly-owned subsidiary Indian Gas Exchange and PAT with that inclusion was Rs. 45.6 crores during the quarter.
For the full-year FY’20, on a standalone basis, the company recorded a 1% increase in revenues, PAT increased by 8% with a PAT margin at 60%. IEX reported a robust 40% YoY electricity volume growth in Q4 FY’20 from 9,908 MU in Q4 FY’19 to 13,835 MU in FY’20. TAM volumes increased by 89% YoY. The southern distribution utilities continued their preference for TAM contracts. On the price front, the day-ahead market saw an overall decline in prices by 14% during Q4 FY’20. Attractive prices helped the commercial and industrial consumers increase procurement by 41% during the same quarter. Including REC, total volumes increased by 29% YoY. For the full fiscal year 2020, IEX reported a 3.2% YoY growth in electricity volumes.
The electricity volumes increased from 52,189BU in FY’19 to 53,862 MU during FY’20. REC volumes were impacted adversely due to a lack of sell-side inventory during the year. During the year, the company continued to rigorously pursue technology-led innovations and made significant investments in technology and automation including manpower.
Further, the company undertook various capacity building initiatives and invested in creating robust practices and processes. With a PAT of Rs 175.7 crores on a consolidated basis, the company continues to be strongly placed with a robust business model and zero debt. Looking forward, COVID-19 has unfolded a multitude of challenges for the power sector but at the same time presenting an opportunity to realign the sector towards higher efficiencies on structural, policy, or operational aspects. In the post-COVID scenario, the nation is likely to see a lot more emphasis on automation, IT solutions, process innovations, customer-centricity across the energy value chain, and energy markets have a unique opportunity to drive the solutions.
The key highlights of the audited consolidated* financial results for the fourth quarter & year ended March 31, 2020, as declared by the Company on May 14, 2020, are as below: