Power companies’ earnings to fall on shrinking generation

Coal Insights Bureau

Earnings of power companies are likely to decline by up to 20 percent due to lower generation, low incentives, fall in merchant rates and one off discount offered to the discoms, Emkay Research said in a sector report.

First quarter earnings are expected to be disappointing with demand and generation across India falling significantly by around 18 percent during the period largely due to subdued power demand during the lockdown.

Demand across the Commercial & Industrial (C&I) segment was halted completely during April-May as industries and offices were shut.

June saw minor recovery in demand, which fell 11 percent on year against a decline of 22 percent and 14 percent on year in April and May respectively. Thus, PLF was down across stations but availability picked up due to improved inventory levels.

Growing outstanding

The moratorium on bill payments has impacted Discoms’ collection efficiency. This has impacted the Discoms outstanding to the gencos, which increased to 1.26 trillion as on May against `950 billion in March. Deficits remained largely flat at 0.4 percent,” the report says.