Adani Green Energy Limited (ADANIGREEN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Adani Green Energy Limited FY '25 Fixed Income Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Pritha Majumdar, Managing Director from the Leverage and Acquisition Finance team from Standard Chartered Bank. Thank you, and over to you, ma'am.

Thanks, Michelle. Good afternoon, everyone. This is Pritha Majumdar from Standard Chartered Bank. On behalf of Adani Green Energy Limited, we are very pleased to welcome you all to the FY '25 earnings call. From the company, on the call today, we have with us Mr. Ashish Khanna, CEO; Mr. Saurabh Shah, CFO; Mr. Anupam Misra, Head, Group Corporate Finance; Mr. Raj Kumar Jain, Head, Business Development; and Mr. Viral Raval, Head, Investor Relations. With that very quick round of introductions, I would like to hand this over to Viral to take this forward. Viral, over to you. Thank you.

Thank you, Pritha. A warm welcome to all the participants in this call. Adani Green Energy has continued its strength of delivering robust operational and financial performance. We hope you would have had this opportunity to go through the earnings presentation that we uploaded on our website. Let me take a brief moment to introduce Mr. Ashish Khanna, who has now taken the charge as the CEO of Adani Green from 1st April of this year. Mr. Khanna is an industry veteran and a campaigner for green growth. Prior to joining us, he was at the forefront of leading the renewable business of Tata Power as CEO of Tata Power Renewable Energy. His 36 years of career span ranges from oil and gas, petrochemicals, thermal power and renewables. Mr. Khanna has completed executive program from IIM Ahmedabad, holds Master's Degree in Management and Systems from IIT Delhi and Bachelors of Engineering from Delhi College of Engineering. Along with Mr. Ashish Khanna, as Pritha said, we have Saurabh Shah, CFO; Raj Kumar Jain, Head of Business Development; Anupam Misra, Head of Corporate Finance; and I look after Investor Relations. Let me hand over to Mr. Ashish Khanna for a brief opening remarks to be followed by Q&A.

Thank you, Viral, and good afternoon, everyone. Welcome to this call. I'm thrilled to share the outstanding operational and financial performance of Adani Green Energy for the fiscal year 2025. As you know, FY '25 has been a record year for India's renewable energy growth with a remarkable addition of 30 gigawatt, which includes, of course, the hydro assets too. At Adani Green, as always, we have contributed significantly by adding 3,309 megawatt of new capacities. This is highest ever by any renewable company in this country. Our efforts accounted for 16% of India's utility scale solar and 14% of wind power installations in FY '25. We have done more than double than anyone else or any other developer in this country. As you know, we are also making significant progress towards developing the world's largest renewable energy plant at Khavda in Gujarat. In a short span of 2 years, we have operationalized more than 4 gigawatt of renewable power there. We are well on track now to complete 30 gigawatt from Khavda by 2029. It's a great place to have the renewable assets. Of course, it took us time to initially stabilize and install and develop that particular area. But now we are well tuned to take full advantage of the solar and the wind potential at Khavda. Testimony of the same is that we have achieved 32.4% of solar CUF in the last quarter. All of this has also been made possible because of our focus towards advanced technology, whether it's in the part of a product like bifacial N-type modules; single access trackers; and of course, cleaning from a waterless robotic cleaning system. This relentless focus on execution and of course, operational excellence duly aided by the advanced technologies, which we are deploying at Khavda and other projects too, is further cementing our leadership in renewable sector in this country. In FY '25, we surpassed more than USD 1 billion in EBITDA. Our energy sales increased by 28% on a Y-o-Y basis, reaching to 28 billion units. Revenue from power supply grew by 23% to INR 9,495 crores and EBITDA increased by 22% to INR 8,818 crores. We continue to prioritize digitization, robust capital management and best-in-class governance. Our advanced analytics techniques, automation and AI-driven decision-making processes are helping us to optimize not only the cost, but also the time for executing projects and excellence in operations and of course, our higher standards on safety and governance. This year, FY '25 was also an important milestone in our capital management journey. Adani Green refinanced its maiden construction facility of USD 1.06 billion. This long-term refinancing rated AA+ represents door-to-door tenure of 19 years, and it's well aligned with our cash flow life cycle of underlying asset portfolio. We have a comprehensive capital management framework to fully fund our growth up to 50 gigawatt by 2030, while maintaining a strict credit discipline. We remain committed to our environment, social and governance goals. And all our operations are now water positive. This goal we have achieved even before our target. We continue to maintain top rankings from esteemed global ESG rating agencies like ISS ESG, who has ranked us #1 in Asia and then Sustainalytics, which has ranked us amongst the top 10. We attribute our success to the dedication and the motivation and the hard work of our team, a steadfast trust and support of our shareholders and partners. Together, we are committing to create a lasting value for our shareholders and delivering what our Chairman has envisioned and give us the vision for clean and affordable power of 50 gigawatt by 2030. We also have a target in our endeavor to achieve 5 gigawatt in this financial year. I will now leave it on for your question-and-answers.

[Operator Instructions]. The first question is from the line of Love Sharma from JPMorgan.

Just a few questions from me. I think one, firstly, on the cash balance side, if you could just highlight on the 2 RG bonds, RG1 and RG2, what would be the year-end cash balance in those 2 assets? And secondly, in terms of the -- given the movement in the bond prices for both the RG1 and RG2 because of global markets as well as the U.S. treasury rates, the dollar prices on those seem to be very attractive. Any thoughts on if you could consider any kind of bond buyback in those 2 bonds? That's it.

I request Saurabh, our CFO, to answer this, Love.

So from the perspective of your first question, which was on the cash balance, which is there on RG1 and RG2, we would just like to inform you that on -- in our presentation, it is on Slide #34, where in -- the cash balance in RG1 is about INR 600 crores, which is there; and in RG2 also, that number is in the range of about INR 700-odd crores.

Okay. Got it. And in terms of how much could be distributed by -- based on the covenants, which we have another 2 bonds from this INR 600 crores, INR 700 crores, could you give a rough sense?

So see, from the aspect of distribution, it is also to do with there are certain assets in this, which are of -- which we have with our JV partner. So that distribution takes place based on that also. But the portion out of this, which is distributable, is to the tune of about INR 400 crores-odd.

Okay. This is total in across the two?

Yes, in each -- INR 400 crores each in both. So the distribution, as you know, when we issued compliance certificate, in the compliance certificate, there is a proper cash flow waterfall mechanism, which is followed. So we keep the necessary reserve. We keep necessary amount of cash for the regular maintenance and then only it is upstreamed. So that full working of how much will be upstream will come in the compliance certificate and only then it will be upstreamed. Before the compliance certification, there is no upstreaming that happens.

You won't be able to. Understood. Understood. Okay. That's very clear. And just one last -- I think a follow-up on the previous question related to that would be any thoughts on the buyback of the 2 bonds?

We are not...

Love, I'll take that question. So Love I think these are 2 bonds, which are amortizing bonds where the cash flow generated is sort of used for repayment over a period of 20 years, 18 years, right? So in these 2 bonds, ideally, we are not in the process. In a corporate bond structure like Adani Food, Adani Electricity, we would strategically keep doing buybacks and market actions. So we would not look at buybacks in these kind of structures, right? But tactically, if there is market dispute like what happened during the tariff situation, it gives us an opportunity to sort of make a small profit and also indicate to the short sellers that we have a very strong technical curve and therefore, they should not -- we would not incentivize short sellers to come into our paper. I think from that standpoint, we can still look at it. But as of now, nothing decided. So I would be going ahead of myself over here. But the philosophy from a group standpoint is here that it makes sense. So for example, a 2030 Adani Electricity, we would not address this in 2029, but we would start addressing it way in advance. So from that, similarly would be the case here.

[Operator Instructions]. The next question is from the line of Michael Stansfield from UBS Asset Management.

Just quickly for FY '26, I just want to confirm I heard correctly. So for this year, FY '26, we have 5 gigawatts of operational projects coming online. And if you could just reiterate what the guidance is for the total CapEx on that? And then also, you made a statement that for the 50 gigawatt guidance for FY '30, can you walk through what is funded at this point for that? I mean I think that we've talked in the past about like FY '26 and '27, that's all fully funded, but like longer term, are there equity and debt financing that have to be put in place?

Yes. So see, from a CapEx perspective, based on 5 gigawatt of addition that we are looking at for the current year, we are looking at a CapEx of about INR 31,000 crores in FY '26 to be done, which is more or less fully funded from debt as well as equity perspective. For our overall target of 50 gigawatt, the equity -- once the entire warrant is completely converted to equity, then our entire equity funding for up to FY '30 for 50 gigawatt is fully funded. From a debt perspective, we constantly keep on reviewing the longevity of our -- the tenure of our debt. And based on that, we continue to look at how to target and get that debt completed that -- this thing. And from a perspective of debt, we also have a $3.4 billion of construction facility, which is available, plus we also have a nonfund-based limit of about $1.2 billion, which we constantly utilize for that. So all in all, our debt tie-up, which we keep on looking at over 1-year period that we keep on doing it. So for next 1, 1.5 years, we target to complete that, which we are doing for this year. And from that way, we will continue to do that for the remaining next 3 to 4 years. I hope this answers your question.

Sorry, just I might have misheard. So the total CapEx for this year is INR 31,000 crore?

Yes.

So at that, we're going to be -- so we're talking around 3.6 billion, of which 75-25 debt to equity.

Yes. 75-25, and most of that debt is already tied up.

[Operator Instructions]. We take the next question from the line of Eric from Nomura.

Okay. Great. So sorry, I think it's a more generic question. I think I understand management is expanding the Khavda solar park across the solar mainly with wind. But how do you see any other new types of, let's say, pump storage hydro? I mean is the company also looking forward to develop this kind of -- I mean, this kind of complicated structure? And how do you see the economics of these kind of new technologies?

Can I summarize what I understood from your question? There were some challenges on the line. So what you're asking on a generic level is that besides the project like Khavda, how is the management looking at other types of RE, including hydro and PSP? Is that the question? Or I have misconstrued it.

Sorry. Can you hear me clearly? I think [indiscernible].

Eric, we couldn't be able to understand your question that well. I will tell you my understanding of your question. You are asking that other than Khavda, how are we looking at other renewable assets like hydros and PSP? Is that your question or we have misconstrued it?

Yes, yes. So I think more about the capacity expansion, how do you see the economics in the pump storage hydro, I mean, or those kind of battery storage? I mean, is the company also looking forward to expanding into this field apart from the plain vanilla or wind solar hybrid?

Yes. I think we are looking into both of those storage assets as well as the pump storage and the battery storage is concerned. We're looking at it very closely. As you know, on the pump storage, our first plant of Chitravathi, which is 500 megawatt, is all set to be commissioned by September '27. We are committed for it. In totality, we are all set for gigawatt capacities in PSP as well as the generic tariffs are concerned, I would say that on a pump storage, one do get because of the advantage of adding storage with the renewable power of less than INR 5, which makes the overall cost very attractive in that sense. You will be hearing from us about the battery storage part too, very closely -- we are looking at it very closely. And I think we have a great opportunity there. So in the last 2 years, the whole market of round-the-clock renewable power [indiscernible] so I'm saying that in the last 1 year or 2, we have seen that there has been a demand of the peak power or round-the-clock renewable power. And I think our company is very well poised to take full advantage of these opportunities which are available. Like I said, we are looking very closely on the battery storage and in the times to come, you will hear about it from us. As always, our plans have been big and what serves the country best and so is in the case of the pump storage, too.

Got it. So -- and can I understand right now, how is the -- I mean, in terms of IRR across these kind of projects, how do I see it right now?

Yes, sure. Eric, I think as Ashish mentioned, from an India perspective, the opportunity is huge when it comes to pump storages and the batteries. The economics have actually moving towards a place where these are -- the cost is less than the grid prices. So there is a lot of opportunities which are there in front of us. The IRRs are better than the what you get in a normal plain vanilla solar or wind project by close to a couple of percentage points above 10. So it finally depends, so it's difficult to answer as a singular number, but it finally depends on what is the site you have. So like you would understand in case of pump storage, how many reservoirs someone is making, natural reservoir is there, closed loop, open loop, all those things are there. We try to ensure that whatever pump storages we are developing are efficient when it comes to capital cost. And that, in turn, leads to a significantly better IRR than a lot of competition you would hear in the market.

[Operator Instructions]. The next question is from the line of Love Sharma from JPMorgan.

So maybe just to follow up on some of the topic, which I think the company has also mentioned in the earnings release about the DOJ case and the SEC case. Where do we stand currently on that? If you could just highlight, is there any progress there? Anything in terms of hearings, anything which you could share with us?

So I think we have been publicizing on what is available is all across. First of all, let us reiterate that this is against the individuals and not the company. The matter has been there in public. You know exactly what is happening. We have an independent review, too, which was also shared across, shared with our auditors, Independent Directors. And so from a group standpoint, as a better governance and transparency as well as regulatory compliances, it has been done. And I think it has been mentioned, too. So from a DOJ standpoint, like I said, it's all while going forward, the alleged -- the allegations are there. And I think we should be seeing some positive results on it from the individual standpoint.

Okay. And could you share if this case has progressed to any kind of hearing stage at all or are we still in sort of the situation where we were a couple of months back or basically in the indictment stage?

See, we are not a party to it. So as a company, we -- whatever disclosures and whatever information that we have is all shared in public, we don't have anything further on that to add. And we are not aware if there is any further development within that case.

[Operator Instructions]. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.

Thank you. I think it was a short [indiscernible]. I once again appreciate all the participants who have come out here. And we would like to reiterate from a management standpoint, our commitment for an excellent execution as well as the operations of AGL in this coming year. There are lots of learnings, which are going to help us in achieving the targets, which we are clearly on track to achieve as well as the fiscal and the physical targets, which we have in front of us. Once again, thanks for your participation. I hand it over to Viral.

Thank you very much, Pritha's team and Chorus for organizing this call. Thanks a lot to all the participants for taking the time out to join this call. Please feel free to reach out to us if you have any further questions. Thank you.

Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of Adani Green Energy Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.