PSU Stock SJVN Drops 5% Despite Strong Profit Jump – Here’s Why

Shares of state-owned power company SJVN Ltd. fell over 5% today after releasing a weak operational report for the fourth quarter (Q4FY24).

The stock hit a near two-week low today, closing at ₹139.65 on Wednesday. Despite this drop, SJVN shares have surged 45% this year and 275% over the past year.

Financial Highlights:

• Net Profit: SJVN reported a net profit of ₹61 crore for January-March, up from ₹17 crore last year, mainly due to a tax credit.
• Tax Credit: The company received a ₹16 crore tax credit this quarter, compared to a ₹40 crore tax expense last year.
• Revenue: Revenue fell by 4% to ₹483 crore from ₹504 crore last year.
• Operating Profit (EBITDA): EBITDA dropped 22% year-on-year to ₹240 crore, with the EBITDA margin shrinking to 49.6% from 61.3%.

This quarter marked the first time in a year that SJVN’s margin dropped below 50%.

Renewable Energy and Dividends:

• Renewable Energy Sales: Revenue from renewable energy sales increased to ₹106.8 crore, up from ₹68 crore last year.
• Dividends: The company declared a final dividend of ₹0.65 per share, in addition to the interim dividend of ₹1.15 per share announced earlier.

Joint Venture with Indian Oil:

SJVN is forming a Joint Venture with Indian Oil Corporation to develop renewable energy projects and other tech-based initiatives. This JV, with an authorized capital of ₹250 crore, is awaiting approval from the Ministry of Power, NITI Aayog, and DIPAM. Both companies will hold a 50% stake in the venture.

Despite the overall increase in net profit, operational weaknesses and a drop in revenue led to a 5% decline in SJVN’s stock price.