Adani Power to acquire DB Power's thermal power assets in Chhattisgarh; stock up by more than 4% today

22 Aug 2022 , 10:58 AM

Shares of Adani Power rose 4% during intraday trading on Monday to a new high of Rs428.20 after the firm announced its agreement to purchase DB Power’s thermal power assets for an estimated Rs7,017 crore. Adani Power traded 3% higher at Rs423.50 at 09:32 a.m., while the S&P BSE Sensex fell 0.7% during the same period.

In Chhattisgarh’s District Janjgir Champa, DB Power owns and runs a functioning 2×600 MW thermal power plant with an estimated revenue of Rs3,488 crore for the fiscal year 2021—2022. (FY22). With fuel supply agreements with Coal India and long- and medium-term power purchase agreements covering 923.5 MW of its capacity, DB Power has been successfully running its facilities.

Adani Power stated in an exchange statement that the acquisition will assist the company in growing its operations and product offerings in the state of Chhattisgarh’s thermal power industry. According to the firm, the proposed transaction is subject to receiving approval from the Competition Commission of India and any additional approvals that may be required as a result of the DPPL and DB Power due diligence that would be done.

Adani Power, in contrast, has outpaced the market in the past month, rising 47% compared to the S&P BSE Sensex’s 6% increase. The stock has increased 255% in the past six months, compared to the benchmark index’s gain of 3%. The company recorded a 17-fold increase in its consolidated profit after tax (PAT) at Rs 4,780 crore in the June quarter, which set off the sudden increase in stock price (Q1FY23). The electric utility firm owned by the Adani Group reported PAT of Rs 278 crore in Q1FY22.

EBITDA, which stands for earnings before interest, taxes, depreciation, and amortisation, increased by 227 percent year over year to Rs 7,506 crore. The impact of higher fuel costs, increased operating expenses brought on by the acquisition of Mahan Energen, unfavourable foreign exchange movement, and change in sales mix were partially offset by the growth, which was aided by prior period income recognition, improved tariff realization, and change in sales mix.

The Indian government has boosted the country’s electricity industry through a variety of changes. According to Adani Electricity’s FY22 annual report, these include fuel linkages under the Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI) and the Ujwal DISCOMS Assurance Yojana (UDAY) to spur the transformation of power distribution businesses.