RESEARCH INSIGHT
on
TORRENT POWER
Submitted for:
FINLATICS
Financial Markets Experience Program (FMEP)
General Overview
Torrent Power Limited is a subsidiary of the Torrent Group, with its main
business being pharmaceuticals and power. It is based out of
Ahmedabad, Gujarat. It is a mid-cap power company in utilities sector. It
is engaged in generation, transmission and distribution of power.
It started small with acquiring the Ahmedabad Electricity Company from Market Cap 8,71,710 (Cr.)
the Government of Gujarat in 1997, by buying their entire stake of
28.89%. It went on with a similar deal with the Surat Electricity Company.
Share Price 87.55
Compared to its competitors, it has operations in three states only,
namely Gujarat, Maharashtra and Uttar Pradesh. At the same time, it is
the sole distributor of electricity to consumers in some districts of these
states.
It produces similar amount of energy as compared to its competitors, but
reports much better profits. In contrast, others are reporting losses. The
strategy of Torrent Power seems to have deals and acquisitions wherein
they get full control of a specific area to provide electricity, thereby
eliminating competition.
Shareholding Pattern
Torrent Power Limited is a subsidiary of the Torrent Group Private Limited which owns 53.57%
of the company.
The Torrent Group is mainly owned by the Mehta family and is run by the late founders sons,
namely Sudhir and Samir Mehta.
They hold the position of Chairman Emeritus and Chairman respectively, and are also the
members of the board. Therefore, we can say that the Mehta family is involved in the
management and decision making of the company.
Category of Shareholders No. of Equity Shares % of Total Shares
Mutual Funds are the second major Promoters 257443318 53.57%
shareholders, after promoters. Foreign Portfolio Investors 43658278 9.08%
Mutual Funds 73228332 15.24%
They are followed by Foreign Portfolio
Central Government 7057951 1.47%
Investors at 9.08%
Retail Investors 33360139 6.94%
Financial Insitutions 13111760 2.73%
Others 52757006 10.97%
Total 480616784 100.00%
Management of Torrent Power
Mr. Sudhir Mehta, Chairman of Rs. 21000 Crore Torrent Group, is the driving force
behind its strong presence in Pharma and Power sectors. Born in 1954, Mr. Sudhir
Mehta formally joined the family business in the early 70s. Mr. Mehta took over as
the Chairman of the Torrent Group in 1998 after the demise of his father, Mr. UN
Mehta. Under the able leadership of Mr. Mehta, Torrent Group has since grown
into a leading business group.
Mr. Samir Mehta, 56 is the Vice Chairman of Rs. 21,000 Crore Torrent Group and
Chairman of Torrent Pharmaceuticals Ltd and Torrent Power Ltd. A fine blend of
business acumen and cautious entrepreneurial optimism, Mr. Mehta has positively
influenced all aspects of the Group culture with his contemporary outlook and
innovative ideas.
Mr. Jinal Mehta, Director Operations has done his Bachelor of Business Studies
(BBS) and Master of Business Administration (MBA) in International Business and
Finance from University of Technology Sydney (UTS), Sydney, Australia. He has
more than 7 years of experience in the power sector.
SWOT Analysis of Torrent Power
STRENGTHS WEAKNESSES
• Companies with strong financials
• Companies with growing costs YoY for long term
• Growth in Net Profit with increasing Profit Margin
projects
(QoQ)
• Declining Net Cash Flow : Companies not able to
• Company with decreasing Promoter pledge
generate net cash
• High dividends, with rising dividend yields over last
• MFs decreased their shareholding last quarter
five years
• Hegemony over a geographical region
THREATS
OPPORTUNITIES • Control of company in the hands of few, can lead to
mismanagement
• Companies with current TTM PE Ratio less than 3
• Not keeping pace with growing technologies
Year, 5 Year and 10 Year PE
• Concentrated to limited geographies
• Turnaround companies- loss to profit QoQ
• Decline in demand due to lockdown and its after
• RSI indicating price strength
maths.
Competitive Analysis
Tata Power Limited is an Indian electric utility company based in Mumbai, Maharashtra, India and is part of the Tata
Group. The core business of the company is to generate, transmit and distribute electricity. It has an installed
electricity generation capacity of 10,577 MW, it is India's largest integrated power company. Tata Power has
operations in India, Singapore, Indonesia, South Africa and Bhutan. Tata Power Group has its operations based in 35
locations in India.
NTPC Limited, formerly known as National Thermal Power Corporation Limited, is an Indian Public Sector
Undertaking. It was incorporated under the Companies Act 1956 with the Government of India (GOI) as it promoter.
Total installed capacity stands at 62,110 MW. It is the largest producer of electricity in India.
It has been going strong and has been reporting increasing revenues every year.
Results (in cr) Torrent Power Tata Power NTPC JSW Energy
Sales Turnover 13,442 7,726 97,700 4,313
PAT 1,238 148 10,112 497
Net Profit Margin 9.20% 1.92% 10.35% 11.52%
JSW Energy Limited (JSWEL) is a division of JSW Group in India. JSW Energy is in various areas of power: Generation,
Transmission and Trading.
JSW Energy has 5681 MW of operational generating capacity. In addition, it has power generation projects at an early
stage under development with a proposed combined installed capacity of 8630 MW, 3158 MW is thermal power,
1391 MW is hydropower and 10 MW solar power. It has presence across several Indian states and have stakes in
natural resource companies in South Africa. This diversity in geographic locations, fuel sources and power off-take
arrangements, helps to de-risk the business.
Shareholding Pattern 2.73% 10.97%
6.94%
1.47%
53.57%
15.24%
9.08%
Promoters Foreign Portfolio Investors Mutual Funds Central Government Retail Investors Financial Insitutions Others
Conclusion
Torrent Power has been going strong and has been reporting increasing revenues every year.
It has the minimum distribution losses in the industry and country.
Enhancing Efficiency of Operating Thermal Power Plants in Torrent Power showed the economically viable measures
for efficiency improvement and some of them were executed while the rest under consideration or being processes
by company. In addition, a lot of technologies, information and exercises were introduced and transferred, state
electricity as well through in-situ demonstration, counterpart trainings in Japan, Seminars/Workshops.
It will have to move towards cleaner energy to reduce its footprint.
Its international strategic partnerships are making operations efficient.
Revenue over the Years
14,000 13,275
12,783
12,000 11,189 11,170
9,759
10,000
Revenue (in Cr.)
8,000
6,000
4,000
2,000
0
2016 2017 2018 2019 2020
Year
