GMR Power EXPLODES: Q2 Profit Skyrockets to ₹888 Cr! Huge Loan Boost for Subsidiary!

Author

Aditi Singh | Whalesbook News Team

Detailed Coverage:

GMR Power and Urban Infra Ltd announced a robust financial performance for the September quarter, with its net profit soaring to ₹888 crore, a substantial increase compared to ₹255 crore in the same period last year. The company's revenue also saw healthy growth, rising by 30.8% year-on-year to ₹1,810 crore from ₹1,383 crore in Q2 FY25.

However, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) experienced a decline of 12.7% year-on-year, falling to ₹364 crore from ₹416 crore. Consequently, the EBITDA margin contracted to 20.1% from 30.1% in the prior year.

In a significant corporate action, the company's board approved the provision of a corporate guarantee for refinancing an existing credit facility of around ₹2,970 crore. This facility will be availed by its subsidiary, GMR Kamalanga Energy Limited (GKEL). GMR Energy Limited, another wholly owned subsidiary, will also provide corporate guarantee and security for this refinancing. The transaction is classified as a material related-party transaction and requires approval from GMR Power and Urban Infra Ltd's shareholders.

Impact: This news indicates strong operational profitability and revenue growth, which is positive for investors. The corporate guarantee for subsidiary refinancing demonstrates support for its funding needs, potentially lowering borrowing costs and strengthening its financial structure. While EBITDA margin contraction warrants monitoring, the overall profit surge is a key positive. The approval process for the guarantee will be watched closely. Rating: 7/10.

Terms Explained: * **Net profit**: The profit a company makes after deducting all expenses, interest, and taxes from its total revenue. * **Revenue**: The total income generated by a company from its normal business operations, such as selling goods or providing services. * **EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)**: A measure of a company's operating performance before accounting for financing costs, taxes, and non-cash expenses like depreciation and amortization. * **EBITDA margin**: Calculated by dividing EBITDA by revenue and multiplying by 100. It indicates how much profit a company makes from each dollar of sales after paying for operating expenses. * **Corporate guarantee**: A promise made by one company to cover the debt or obligation of another entity (often a subsidiary) if that entity fails to meet its obligations. * **Refinancing**: The process of restructuring an existing debt, usually by taking out a new loan to pay off an old one, often to get better interest rates or terms. * **Credit facility**: An agreement that allows a borrower to draw funds up to a certain limit, essentially a line of credit. * **Subsidiary**: A company that is controlled by another, larger company (the parent company). * **Material related-party transaction**: A deal between a company and parties that have a relationship with it (like subsidiaries, directors, or major shareholders) that is significant enough to require disclosure and shareholder approval.