Adani Power Limited (ADANIPOWER.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Adani Power Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Nidhi Shah from ICICI Securities Limited. Thank you, and over to you, ma'am.

Yes. Thank you, Amshad. Good afternoon. On behalf of ICICI Securities, we are pleased to welcome you all to the Q1 FY '26 Earnings Call of Adani Power Limited. Today, we have with us from the management team represented by Mr. S. B. Khyalia sir, the CEO; Mr. Dilip Jha, CFO; and Mr. Nishit Dave, AVP, Investor Relations. We will start with brief opening remarks, which will be followed by a quick Q&A session. Over to you, Mr. Khyalia.

Good afternoon, everyone. Thank you for joining us today to discuss Adani Power's financial results for the first quarter of '25, '26. In the recently concluded quarter, Adani Power has again demonstrated its competitive strength and the resilience of its business model. In spite of weather-induced demand softness and a high base, we have delivered a quarter with great power dispatch and robust profitability. We have also expanded our capacity further by acquiring Vidarbha Industries Power Limited, which has 600-megawatt capacity that has been revived by us. This acquisition will expand our presence in the state of Maharashtra and provide further opportunity for growth. Apart from this, we have also received more than USD 500 million payment from the Bangladesh Power Development Board towards their outstanding dues in the end of June and July. The customer has been paying us now regularly. As a result, the outstanding receivables position has now been brought to near normal levels, which was so far an issue of concern. Now to talk about the operational and financial performance, during the first quarter of financial year '26, while the all India demand has shrunk by 1.6% due to early monsoon, Adani Power supplied 1.6% more power with 24.6 billion units as compared to quarter 1 of '25. You may recall that the first quarter of the previous year was marked by an intense heat wave, which led to a surge in power demand. While the offtake under PPAs reduced due to weaker power demand in quarter first of '26, APL sales volume was supported by the additional 2,300 megawatt capacity acquired by us last year and a higher short-term sales under bilateral and exchange model. Our strategically located merchant capacity continues to enjoy significant competitive advantage in the short-term market, thus providing a market-linked upside to our earnings. Consequently, APL registered a stable continuing total revenue of INR 14,167 crores, healthy EBITDA of INR 5,744 crores and a strong profit after tax of INR 3,305 crores in quarter 1 of financial year '26. Tariff realization was lower during quarter 1 of 2026 due to lower import coal prices in addition to lower short-term tariffs. In the short term, operating expenses are elevated due to the recent acquisitions. We are undertaking various initiatives to turn the units around quickly and improve their profitability. Now to talk about the long-term outlook, we are firm believers in the promise of the power sector, which is closely aligned with the India's economic prospects. We are confident that the path to a secure and sustainable energy future passes through the thermal power landscape and that coal will continue to be an important energy source for many decades to come. Given India's economic growth prospects, we anticipate power deficits to arise once again as demand improves across the nation. Government has already given a target of 80 gigawatts of additional thermal power capacity to meet this demand. And now this target is being raised again to 95 gigawatt in view of emerging trends. This gives rise to a very attractive opportunity and financially strong and experienced private sector players are ideally positioned to capitalize on it. With this vision, we have locked in the supplies of boilers, turbines and generators for the entire 11.2 gigawatt new capacity addition. We are also signing up contracts for erection and commissioning balance of plant, et cetera, in a phased manner for the upcoming projects. As you would be aware, we already purchased all the land required for the expansion, which is a result of the foresight employed in identifying this opportunity in advance and acquiring the right resources at the right locations. We are funding these projects mostly from our own cash flows, which removes the reliance on project lenders. We also have a proven in-house project management capability and experienced team, which will help us monitor and execute these projects efficiently. We have achieved rapid progress in project execution of 4,800 megawatts of capacity expansion out of our targeted addition of 12,520 megawatts by 2030. The ongoing Phase 2 project at Mahan in Madhya Pradesh has already crossed 66% of execution, while the Raipur Phase 2 project in Chhattisgarh has crossed 25% and Raigarh Phase 2 has crossed 20% within a short period. We have also received environmental clearance for the Korba Phase 2 expansion revival, which will add 1,320-megawatt capacity upon completion. On the PPA type of front, we have recently signed a long-term PPA with Uttar Pradesh DISCOM for 1,600 megawatt gross capacity, which brings our freight capacity tie-up to 4,520 megawatts. We are also bidding for various large PPAs in states such as Bihar, Madhya Pradesh, Rajasthan, Uttarakhand, et cetera. We are highly confident that our unparalleled competitive advantages, coupled with the early mover advantage that we also possess, will help us to succeed in these bids. As we have mentioned earlier also, when the DISCOMs invite these bids, they indicate the mines from which coal will be supplied to the project. These coal linkages will be provided from mines earmarked for the states under such a policy based on their requirement. The new risk mitigated model of the PPA will generate attractive returns for the developers that are able to set up projects on time with a control on capital cost. In conclusion, we are highly enthused by the thermal power investment opportunity. We are sure that it will continue to play a key role for supporting India's economy for the foreseeable future and that Adani Power will play a key role in attaining the targeted capacity addition of 80 gigawatts or more by the country. In conclusion, I would like to thank you our dedicated team, our partners and our stakeholders for their support. Together, we are building a sustainable and prosperous future. Thank you, and over to you, Dilip.

Thank you, Khyalia sir, and good afternoon, ladies and gentlemen. It is my privilege to present Adani Power's financial performance for the fourth quarter of FY '26. I am pleased to report that despite a challenging operating environment, Adani Power has delivered another quarter of robust and resilient performance. The recent flatness in power demand affected offtake of power under PPAs by DISCOMs. It also affected tariffs in the merchant market. However, Adani Power was able to beat these trends with higher operating capacity and short-term tie-ups for the merchant capacity to deliver results in line with expectation. These results underscore our financial discipline and strategic foresight in navigating market volatility while maintaining profitability. Talking about the financial performance for quarter 1 FY '26. Let me begin with the headline numbers that already been said by Khyalia sir in his quote. Now the total continuing revenue for quarter 1 FY '26 was INR 14,167 crores, slightly lower year-on-year compared to INR 15,052 crores in quarter 1 FY '25 due to softer merchant tariffs and imported coal prices, but is stable consequently compared to INR 14,522 crores in quarter 4 FY '25. We were able to exert control over the cost of fuel at INR 7,319 crores in quarter 1 FY '26 as compared to INR 8,074 crores in quarter 1 FY '25. This compares favorably with the trend in continuing operating revenues between the two periods. Operating expenses have gone up from INR 852 crores in quarter 1 FY '25 to INR 1,105 crores in quarter 1 FY '26 and this is primarily due to the acquisition of 2,300 megawatt capacity under the inorganic route, but it also includes the impact of higher CSR expenses. Continuing EBITDA came in at INR 5,744 crores, reflecting our ability to manage fuel costs and optimize operation even as we expanded our footprint. It was higher in comparison to INR 5,098 crores for quarter 4 FY '25, but lower in comparison to INR 6,290 crores in quarter 1 FY '25. Depreciation for the quarter increased to INR 1,105 crores in quarter 1 FY '26 due to the recent acquisitions. We maintained tight control over the finance cost, which was reported at INR 857 crores in quarter 1 FY '26 despite new acquisitions and increased scale of operations. Our profit after tax for quarter 1 FY '26 stood at INR 3,305 crores, a strong result despite lower merchant tariffs and elevated operating expenses following recent acquisitions. In comparison, the PAT for quarter 4 FY '25 was INR 2,599 crores and for quarter 1 FY '25 was INR 3,913 crores. Our judicious use of cash flows and emphasis on maintaining low leverage has kept the debt levels low, even after considering the ongoing capital expenditure and some bridge financing. Total debt as on 30th June '25 is INR 44,372 crores as compared to INR 38,775 crores as of 31st March '25. The liquidity of our operations remains high with robust cash accruals. As a result of this, net debt position is INR 37,437 crores as compared to INR 31,023 crores for the 2 quarters end. We have also mostly retired the cash flow accommodation received from promoters in the form of Unsecured Perpetual Securities. During quarter 1 FY '26, we have repaid INR 2,579 crores of UPS against principal amount and the outstanding balance now is only INR 478 crores. All in all, we have ended the quarter -- first quarter '25 -- first quarter of '26 with a strong financial position and ample liquidity. We have been able to demonstrate the stability and resilience of our revenues and EBITDA conclusively during the quarter and followed through on our strategy on self-funded, debt-light growth. As Khyalia sir has already said, we have already received more than USD 500 million payment from Bangladesh Power Development Board towards outstanding dues in June and July. The customer has been paying us regularly. Another key development during the quarter was the amalgamation of Adani Power (Jharkhand) Limited. This brings the 1,600-megawatt Godda plant into APL stand-alone entity. This has led to an implicit credit rating upgrade of Godda to AA stable, reducing finance costs. As we know that India's power demand is growing strongly, even after taking weather-induced variability into account, there is a clear cut requirement of more thermal power capacity to meet anticipated deficits. And we expect that the additional capacity required will go from 80 to 95 gigawatts as Khyalia sir said in his speech. In closing, I want to emphasize that Adani Power is strongly positioned for the future. Our strong balance sheet, strategic acquisitions and disciplined executions are driving sustainable growth. We remain committed to delivering reliable, affordable and clean energy to power India's progress. I would like to request the moderator to open the floor for question-answer.

[Operator Instructions] The first question is from the line of [ Abhinav ] from ICICI Securities.

My first question is the company has given an order of about INR 65 billion to BHEL. What does it exactly entail given that all our equipments are already been tied up for the upcoming capacities?

Yes, sure. Thank you for the question. So as you know that there is huge demand of 80 gigawatts of the thermal-based power load and -- by 3032 (sic) [ 2032 ], and this will increase from 80 to 95 is what we are expecting. So we are currently in the evaluation phase, exploring various opportunities for expansion. Once the plan is ramped up and aligned with our strategic goals, we will share all the updates with concrete numbers in due course of time.

Understood, sir. And apart from this, have we given any other order to any other player regarding -- related to the equipment?

Yes. That's what I said, we are currently evaluating all the options available. And we are evaluating these numbers, units, the growth, requirement in the country, and it will work out. And then definitely, we'll come with all these numbers.

Understood. So -- and the second question is on the recently acquired Coastal, Lanco and Vidarbha assets. Like how have the operations been? Are you facing any challenges? What is the PLF? And for these three acquired assets, what is the EBITDA we can expect?

First, the technical part, Lanco, we have very less challenge except a small issue related to -- as disposal, so which we are taking care of. Second is the Coastal. Coastal, one unit, we have already done complete overhauling. And after the complete overhauling, I think machine is now at par with any other power station. Another machine, we will be taking for complete overhauling in the current month. And once that complete overhauling is done, this machine will again become at par with any other good maintained assets. It has taken some time. Because of that, after we took over, we have to place the orders for the equipment, spares, et cetera. And obviously, these are the machines not of domestic make. So it takes some time to get the spares and therefore, we have to take some time. But once this overhauling is done, then there will not be any further challenge as regards to the Coastal is also concerned. And thereafter, we expect that it will have a full availability, the normal availability. So Lanco is already addressed. The Coastal will get addressed by end of this month. What was the third one?

Vidarbha.

Vidarbha, again, obviously, there was a challenge because the station was in shutdown condition from 2018. But as soon as we have taken over, we have done the advanced planning because this was undergoing the NCLT process, and we were the highest bidder for a long time. And therefore, we had done good planning in advance. And now the machines are already properly overhauled and they are good to give a normal availability. So there is no challenge as far as Vidarbha is concerned also. Thank you.

Understood. Sir, my final question is what was the merchant realization in the first quarter and outlook for this year, merchant outlook?

So our merchant realization for first quarter was INR 6.51 per kilowatt as against last year same quarter, it was INR 7.60.

So merchant rates during first quarter are obviously much lower than as compared to the last year same quarter because of weather conditions, which we mentioned in our initial remarks. And as you are aware that this year, monsoon has come in the month of May itself. And there were weather disturbances in the month of April also. So April, May, June, entire quarter was from the point of view of power demand was very sluggish. And since the monsoon has come early, we are of the view that the monsoon will go also early. And therefore, we think that the outlook of even the second quarter will be better than the last year because of this reason that last year, the monsoon was delayed and the impact of monsoon was in the second quarter. This year, the impact of monsoon is more in the first quarter. So second quarter onwards, the demand should pick up, and we feel that there should be a good demand and consequently the merchant rates.

The next question is from the line of Aniket Mittal from SBI Mutual Funds.

My first question was just to understand the latest ruling for FGD, does that change our CapEx...

Sorry to interrupt, sir, but there is some kind of disturbance in your background. Could you move to a quieter area?

Am I audible now?

Yes, sir.

Okay. The latest ruling on FGD, how does that change our outlook on CapEx for the under construction plants?

Your question is not very clear. Can you repeat it? FGD...

With the recent ruling on FGD, does that change our CapEx estimates or outlook on the under construction projects?

I think there is lot of noise in the background. So -- it's okay now. So...

Yes, sir. Go ahead.

So after this notification has come, obviously, the power stations which are under planning and execution, where we have not started the execution of FGD, there is no requirement of FGD now, and therefore, we will drop the FGD expenditure from those power plants. And two power stations in case of one at Mahan and another at Raipur, we are in advanced stage, and therefore, we will continue to execute there. In rest of the power plants, we will not execute. And to that extent, cost of capital will go down, project cost will go down. Exact numbers, it would not be appropriate to discuss the project numbers in detail or the bifurcation of the project cost.

The other question was to understand on these upcoming tenders that you talked about, Bihar, Rajasthan, MP, Uttarakhand. Which of these tenders have the requirement where the plant needs to be set up in the same state? Is that the case for all these tenders? Or another state...

Your voice is breaking, getting lots of disturbance.

Anyhow, the Bihar, the tender is -- the project is to be established in the Bihar itself. In case of Rajasthan also, the present tender condition is to construct the power plant in case of Rajasthan itself. As regards to MP is also concerned, MP is also, the power plant needs to be constructed in the state of MP. These are broadly the tenders in market. In case of Uttarakhand, the project location is not specified, so project can be anywhere in India. So this is broadly the position of the tenders.

Okay. Understood. Just one last question. What was the PLF for Godda during this quarter?

It was -- during the quarter, the PLF for the Godda was 73%.

[Operator Instructions] The next question is from the line of Jainam Jain from ICICI Securities.

Sir, my first question is what is the revenue and EBITDA guidance for FY '26?

Sorry, can you please repeat the question?