Sarda Energy surges 6%, hits all-time high on healthy earnings outlook

Kristen Richey

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Shares of Sarda Energy & Minerals hit a record high of Rs 1,024.95, surging 6 per cent on the BSE in Friday’s intra-day trade on expectation of healthy earnings going ahead. The stock of iron & steel/intermediates products-maker surpassed its previous high of Rs 1,000 touched on March 3, 2022.

Sarda Energy on Thursday informed that the rating agency India Ratings has assigned fresh ratings ‘IND A-’/Stable for a long term issuer rating of the Company's Subsidiary – Madhya Bharat Power Corporation Ltd (MBPCL).

MBPCL has signed a 35-year power purchase agreement (PPA) for its 113megawatt (MW) hydro-electric project with Chhattisgarh State Power Distribution Company Limited (CSPDCL; ‘IND A-’/Stable), providing long-term revenue visibility to the project. The PPA enables the plant to recover an annual fixed cost, based on the regulated cost plus return on equity framework subject to plant availability and energy generation (compared to design energy) of the project. CLICK HERE FOR MORE DETAILS

Meanwhile, for October-December quarter (Q3FY22), Sarda Energy reported 46 per cent year-on-year (YoY) jump in its consolidated net profit at Rs 169 crore. On a sequential basis, however, profit was down 36 per cent from Rs 263 crore in Q2FY22.

The company achieved consolidated revenue of Rs 1,000 crore during Q3FY22 as against Rs 1,025 crore in Q2FY22 and Rs 604 crore in Q3FY21, which is flat quarter-on-quarter and grew by 66 per cent YoY. The fall in profitability for the quarter was mainly on account of fall in profit of hydropower projects, which is seasonal in nature and booking of mark-to-market losses as against mark-to-market gain booked in Q2.

“The quarter gone by has been a quarter of consolation for metal industry. The company has recorded highest ever production of ferro alloys. From November 2021 all five ferro alloys furnaces in Raipur have become fully operational, which is reflected in improved production. Full effect of this will be reflected in the current quarter”, the management said. The company expects to complete the refinance or renegotiation of the terms of the loan with the existing lender in the current quarter.

After correction in Q3 prices of iron ore and pellets have started rising again on the back of demand from China. Price of coal and coke is also going up after export restriction imposed by Indonesia and fall of production in South Africa. Prices of ferro alloys are also moving up due to increased prices of energy. Any disruptions in Ukraine will affect ferro alloys supply and move up the prices further. The increased domestic consumption and stable export demand has balanced domestic demand-supply of steel and ferro alloys which should enable stable capacity utilization and improved pricing, the management said in earnings conference call.


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