Decreased Profits in Adani Power's Q4: 3.66% Dip Due to New Acquisitions and Sluggish Demand Growth
Headline: Adani Power Shows Q4 Dip in Net Profit, Citing Higher Depreciation and Slower Demand
Down Low: Adani Power Ltd reported a Q4 net profit of Rs 2,636.97 crore, a 3.66% decrease from Rs 2,737.24 crore in the same quarter last year.
The Low Down: The company struggled with higher depreciation due to new acquisitions and slower demand growth, coupled with lower merchant tariffs. Despite an increased volume of power generation, the profit decline was evident. However, the company's revenue from operations soared by 6.54% to Rs 14,237.40 crore, primarily due to higher volumes. The consolidated continuing EBITDA for Q4 FY25 stood at Rs 5,098 crore, dipping from Rs 5,273 crore in Q4 FY24, mainly due to additional operating expenses from recent acquisitions.
The Year in Review: For the full year, Adani Power generated 102.2 Billion Units (BU) of power, a 19.5% increase from FY24. The consolidated power sale volume for FY25 was also up by 20.7% at 95.9 BU, surpassing FY24's 79.4 BU due to robust power demand and higher operating capacity. The total revenues for FY25 were Rs 56,473 crore, boosted by increased sales volumes, albeit partially offset by lower tariff realisation.
Vedanta's Turn: In contrast, Vedanta's Q4 profit soared to Rs 4,961 crore, with a 13.93% increase in revenue due to favorable market prices and higher premiums.
CEO Speaks: SB Khyalia, CEO of Adani Power Limited, stated, "Adani Power has delivered impressive operational and financial performance for FY 2024-25, highlighting the robustness of Adani Group companies. As we move ahead, we are focusing on enhancing our competitive edge and reaffirming our sectoral leadership."
Power Demand Insights: All-India power demand rose by 3.5% to 415 BU in Q4 FY25 compared to Q4 FY24. The full-year demand for FY25 grew by 4.2% to 1,695 BU, experiencing a marginal slowdown mainly due to cold weather. However, demand picked up in March 2025, registering a 6.6% growth over March 2024. The average market clearing price on the Indian Energy Exchange declined by 15% year-on-year to Rs 4.47/kWh in FY25 from Rs 5.24/kWh in FY24.
The Debt Load: Adani Power's net total debt increased to Rs 31,023 crore as of 31st March 2025 from Rs 26,545 crore, primarily due to acquisition debt and higher working capital borrowings. Despite this, Adani Power remains a relatively low-debt power generator, with a net debt per MW of Rs 1.77 crore as of 31st March 2025.
Balance Sheet Update: The company closed FY 2024-25 with a strengthened balance sheet and sound liquidity, thanks to robust performance throughout the year. Total shareholders' funds increased to Rs 56,347 crore as of 31st March 2025 from Rs 43,145 crore as of 31st March 2024.
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Fun Fact: Adani Power's Q4 FY25 performance marks the company’s ever-higher operating and financial performance, demonstrating the overall vigor and resilience of the Adani Group's companies.
- Adani Power's focus in the upcoming fiscal year (FY25) may include enhancing efficiencies and striving for sectoral leadership to counter the impact of higher depreciation and slower demand, as demonstrated by the Q4 dip in net profit.
- The company's Q4 net profit drop in FY24 might not necessarily deter potential investors, given the substantial revenue increase of 6.54% and the soaring consolidated EBITDA of Rs 5,098 crore.
- There could be opportunities in finance and business real-estate for Adani Power post FY25, considering the company's successful implementation of strategic acquisitions, a strengthened balance sheet, and sound liquidity.
- The market might see defi and investing trends emerging in Adani Power's future business strategy, given the company's continued focus on portfolio management and improvements in operational and financial performance.
- Analysts predict that Adani Power's net total debt could decrease in the following financial years due to the company's steady influx of revenue from operations and the optimization of new acquisitions.
- Adani Power's net debt per MW as of 31st March 2025 is significantly lower compared to other power generator companies in the market, positioning Adani Power as a comparatively low-debt power generator.
- Future market players could experiment with techniques to boost liquidity and enhance portfolio diversification strategies, taking cues from Adani Power's finance management efforts during FY25.
