Mumbai: In a market increasingly driven by challenges, Adani Power’s Q2 FY25 financial report paints a bleak picture. With a consolidated profit of Rs 3,297.52 crores—a sharp decrease from last year’s Rs 6,594.17 crores—the company finds itself navigating rising fuel costs and increased debt obligations that are quickly eroding its bottom line.
Adani Power’s Q2 revenues showed marginal growth to Rs 13,338.88 crores, a slight rise from Rs 12,990.58 crores in Q2 FY24. However, this pliability is overshadowed by mounting expenses, particularly in fuel costs, which surged by 4 per cent year-over-year to Rs 7,032.22 crores. As the company relies heavily on imported coal, volatile global energy prices have sharply impacted operating costs, squeezing profit margins even further.
The debt situation poses a critical challenge. The company’s consolidated finance costs stood at Rs 806.87 crores, indicating a substantial debt load that continues to swell. Adani Power’s current liabilities reached an alarming Rs 52,788.77 crores, up from Rs 49,179.74 crores just a year ago. With recent borrowings amounting to Rs 5,000 crores, the company’s strategy to navigate debt remains a question mark for investors.
Adding to the financial strain, deferred tax expenses have spiked, with an expense of Rs 706.30 crores in Q2 FY25 compared to a tax credit last year. Coupled with a reduction in net profit and mounting tax liabilities, the company’s financial health appears fragile, risking potential downgrades from creditors.
In Q2, the board also approved an amalgamation with Adani Power Jharkhand, a move intended to streamline operations. Despite the expected efficiencies, this restructuring might not yield immediate financial benefits, adding complexity to an already stressed balance sheet.
While Adani Power continues to expand its portfolio, these fiscal pressures pose significant hurdles. The immediate challenge lies in addressing fuel costs and debt servicing, with failure to mitigate these factors likely to strain cash flows and diminish investor confidence.
