Vedanta Power shares fall 3% despite 38% jump in Q1 sales. Should you buy, sell or hold?

According to its production update filed with the exchanges, the company’s total power sales increased 38% year-on-year to 5,225 million units in the first quarter of FY27 from 3,784 million units a year ago.

On a sequential basis, however, power sales declined 6% from 5,530 million units in the March quarter. The company said the figures should be viewed in the context of Vedanta Power’s demerger from Vedanta Ltd. during the first quarter of FY27.

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Vedanta Power Q1 update breakdown

Meenakshi Energy posted the sharpest growth during the quarter. Power sales surged 245% year-on-year to 1,350 million units from 391 million units in the corresponding quarter last year. Sales also rose 16% from 1,161 million units in the March quarter. Vedanta Power said the year-ago performance reflected operations from only one 300-MW unit, while the latest quarter includes the expanded 1,000-MW capacity.

Talwandi Sabo Thermal Plant remained the company’s largest power generating asset, reporting sales of 2,723 million units during the quarter. This was broadly unchanged from 2,715 million units a year earlier but was 14% higher than 2,386 million units recorded in the preceding quarter.

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The plant availability factor improved to 86% from 77% in the March quarter. The company noted that its power purchase agreement with the Punjab government compensates the plant based on a normative availability of 80%, and Talwandi Sabo remained above that threshold during the quarter.

At Jharsuguda Thermal Plant, power sales stood at 687 million units, marginally higher than 678 million units in the year-ago period. Sequentially, however, sales fell 23% from 896 million units in the March quarter. The plant availability factor improved to 93% from 66% a year ago and was largely unchanged from 94% in the previous quarter.Sakti Thermal Plant, formerly known as Athena Power Plant, was the only weak performer during the quarter. Power sales dropped to 465 million units from 1,087 million units in the March quarter. The company said the plant has remained temporarily shut since April 14 following a boiler blast in Unit I, which reduced plant availability and impacted operations.

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Vedanta Power said it currently has an installed generation capacity of 4.2 GW and is developing an additional 0.6 GW under Shakti Unit II. Its portfolio comprises the 1,980 MW Talwandi Sabo plant in Punjab, the 1,000 MW Meenakshi facility in Andhra Pradesh, the 1,200 MW Sakti plant in Chhattisgarh and the 600 MW Jharsuguda unit in Odisha.

Brokerages’ view

Brokerages remain divided on valuations for Vedanta Power. Domestic brokerage Emkay estimates a value of around Rs 51.7 per share, while Kotak Institutional Equities pegs it at Rs 60 per share. Nuvama’s valuation implies a value of around Rs 47 per share, while CLSA’s estimate corresponds to roughly Rs 35 per share.

The company owns more than 4 GW of installed power generation capacity across Punjab, Andhra Pradesh, Chhattisgarh and Odisha. Its portfolio includes the Talwandi Sabo Thermal Plant, Meenakshi Energy, Sakti Power and the Jharsuguda Thermal Plant.

Management has outlined plans to become one of India’s top three private thermal power producers by FY33 through capacity expansion and asset turnarounds. The business also benefits from several long-term and medium-term power purchase agreements with state utilities, providing a degree of revenue visibility.

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