In a typically lacklustre market, shares of Adani Power rose 4% to a record high of Rs 428.20 during intraday trading on Monday after the firm announced its agreement to purchase DB Power’s thermal power assets for an estimated Rs 7,017 crore. Adani Power traded 3% higher at Rs 423.50 at 09:32 a.m., while the S&P BSE Sensex fell 0.7% during the same period.
DB Power owns and operates a running 2×600 MW thermal power plant at District Janjgir Champa in Chhattisgarh, and had a turnover of Rs 3,488 crore for the fiscal 2021-22 (FY22). DB Power has long and medium-term power purchase agreements for 923.5 MW of its capacity, backed by fuel supply agreements with Coal India, and has been operating its facilities profitably.
“The acquisition will help to expand its offerings and operations in the thermal power sector in the state of Chhattisgarh. The proposed transaction is subject to receipt of approval from the Competition Commission of India and any other approvals as may be identified following the due diligence exercise to be conducted with respect to DPPL and DB Power,” the company said.
Meanwhile, in the past one month, Adani Power has outperformed the market by surging 47 per cent as against a 6 per cent rise in the S&P BSE Sensex. Over the past six months, the stock has zoomed 255 per cent as compared to 3 per cent gain in the benchmark index.
The sharp rally in the Adani Power stock price was triggered after the company reported 17-fold jump in its consolidated profit after tax (PAT) at Rs 4,780 crore in the June quarter (Q1FY23). The Adani Group electric utility company had posted PAT of Rs 278 crore in Q1FY22.
Earnings before interest, taxes, depreciation, and amortization (ebitda) jumped 227 per cent YoY to Rs 7,506 crore. The growth was aided by prior period income recognition, improved tariff realisation, and change in sales mix, partially offset by impact of higher fuel cost, increased operating expenses owing to acquisition of Mahan Energen, unfavourable foreign exchange movement, etc.