Adani Power, the power generating arm of the Adani Group, reported a significant drop in its third-quarter profit due to the rise in fuel costs.
Image Credit – Business Upturn
The company posted a consolidated net profit of 87.7 million rupees ($1.06 million) in the quarter ending December 31, 2022, compared to 2.18 billion rupees in the same period a year ago. High Import Coal Prices and Insufficient Domestic Fuel Supply Blamed for Poor Performance
The company cited high import coal prices and insufficient domestic fuel availability due to high power demand as the primary reasons for the poor performance. Fuel costs, which comprise about 70% of the company’s total expenses, nearly doubled to 55.33 billion rupees in the quarter. Despite the rising costs, Adani Power’s revenue from operations rose 44.8% to 77.64 billion rupees.
Image Credit – The Financial Express.
Adani Group Reiterates No Material Adverse Impact from Independent Review Following Short-Seller’s Report
Adani Power and other group companies stated that they saw no material adverse impact from a possible independent review following a critical report by U.S. short-seller Hindenburg Research. The report, released on January 24, 2023, alleged that the company had engaged in stock manipulation and used tax havens. The Adani Group vehemently denied the allegations and initially said it would evaluate an independent review while reporting results for other group companies on February 7. The statement was reiterated with Adani Power’s quarterly earnings disclosure on February 8.
Shares of Adani Power Plunge 34% Since Short-Seller’s Report
The report by Hindenburg Research has had a significant impact on Adani Power’s shares, which have fallen nearly 34% since January 24. The company has lost $4.3 billion since the report was released, and the Adani Group’s losses have ballooned to over $102 billion.
Adani Wilmar, another group company, stated that the Hindenburg Research report had no bearing on its operations.
Conclusion
Adani Power’s Q3 results reflect the impact of rising fuel costs on the company’s operations. The increase in fuel costs, combined with a possible independent review following a critical report by a U.S. short-seller, has resulted in a significant drop in the company’s profit. Despite the challenges, Adani Power remains committed to its operations, and the company and the Adani Group continue to deny any allegations of stock manipulation or the use of tax havens.