State-run miner and power producer NLC India Ltd reported a 26% decline in net profit for the second quarter of FY2025, primarily due to higher operating expenses and lower power generation. The company’s bottom line dropped to Rs. 730 crore compared with Rs. 986 crore in the same quarter last year, even as revenue rose marginally on improved realizations. Increased fuel costs, maintenance expenditure, and subdued lignite output weighed on performance. Despite the profit slump, NLC India remains optimistic about its long-term outlook, supported by its aggressive expansion in renewable energy and capacity additions in thermal and mining projects.
Profit Falls on Cost Escalation
NLC India Ltd, formerly Neyveli Lignite Corporation, reported a significant dip in profitability for the July–September quarter of FY2025, with net profit declining 26% year-on-year to Rs. 730 crore. The decline was attributed mainly to a surge in operational costs and lower-than-expected generation from its thermal units.
Revenue from operations, however, rose slightly to Rs. 4,125 crore, compared to Rs. 4,050 crore in the corresponding quarter last year, reflecting improved price realization and stable demand from distribution companies. The company’s total expenses jumped by nearly 12% year-on-year, driven by higher input costs, maintenance charges, and employee-related expenditures.
The earnings before interest, tax, depreciation, and amortization (EBITDA) margin contracted to 22%, down from 28% in the year-ago period, underscoring the pressure on profitability despite steady revenues.
Segment Performance: Lignite and Power
NLC India’s lignite mining operations—a key input for its power generation—faced output constraints due to heavy monsoon rains and operational challenges. Consequently, lignite production fell by approximately 8% year-on-year, impacting the supply chain for captive power generation.
The company’s thermal power generation also witnessed a moderate decline, with plant load factors (PLF) averaging around 65%, compared to 71% a year earlier. Rising coal and transportation costs further strained margins, although higher realizations from long-term power purchase agreements (PPAs) provided partial relief.
Meanwhile, the renewable energy portfolio, comprising solar and wind power assets, continued to grow, contributing modestly to overall revenue but showing strong potential for future expansion.
Expenses and Operational Challenges
The company’s cost structure has come under strain amid inflationary pressures across raw materials, logistics, and maintenance. Fuel costs surged nearly 15%, while employee costs saw a 10% increase, partly due to revised wage agreements.
In addition, depreciation and finance costs rose as new projects were commissioned under the company’s ongoing capacity expansion program, which aims to add more than 4,000 MW of power—including both thermal and renewable capacities—over the next three years.
Despite these headwinds, NLC India maintained a stable supply position to its key southern utility clients, ensuring continuity of power distribution to Tamil Nadu, Kerala, and Puducherry.
Renewable Energy Expansion Gains Traction
In line with India’s clean energy goals, NLC India has been accelerating its diversification into solar and wind power. The company currently operates more than 1.4 GW of renewable capacity, with another 2 GW under development.
Recent project milestones include the commissioning of solar power projects in Rajasthan and Tamil Nadu, contributing to the company’s strategy of reducing dependence on lignite-based generation. By FY2030, NLC India aims to achieve a renewable share of 35% in its total power portfolio.
Managing Director Rakesh Kumar reaffirmed the company’s commitment to sustainable growth, stating that “NLC India’s long-term focus remains on balancing profitability with green transition through investments in low-carbon technologies and next-generation energy projects.”
Financial Outlook and Industry Context
The second-quarter results come at a time when the broader power generation sector in India is facing volatility due to fluctuating fuel prices, maintenance shutdowns, and delayed payments from distribution companies. Despite short-term challenges, analysts view NLC India’s strong balance sheet, backed projects, and government ownership as key stabilizing factors.
Brokerage firms expect the company’s financial performance to improve in the second half of FY2025, supported by higher plant availability, improved monsoon conditions, and commissioning of new renewable assets.
Moreover, the company’s capital expenditure pipeline, estimated at Rs. 15,000 crore over the next few years, is likely to enhance operational efficiency and energy diversification.
Conclusion: Growth Amid Pressure
While the Q2 FY2025 earnings reflect a challenging operating environment, NLC India continues to invest in building a resilient and diversified power portfolio. The profit dip, though significant, appears transitional as the company aligns itself with India’s energy transition roadmap and renewable energy ambitions.
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