Adani Power Limited (ADANIPOWER) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Adani Power Limited Q1 FY '27 earnings conference call hosted by ICICI Securities Limited. [Operator Instructions] I now hand the conference over to Mr. Mohit Kumar from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Rio. Good afternoon. On behalf of ICICI Securities, I would like to welcome you all to the Q1 FY '27 earnings call of Adani Power Limited. Today, we have with us from the management Mr. S.B. Khyalia, CEO; Mr. Dilip Jha, CFO; and Mr. Nishit Dave, Head of Investor Relations. We will start with a brief opening remarks, which will be followed by Q&A. Thank you and over to you, sir.

Good afternoon, friends. I want to extend a warm welcome to everyone who has joined us today for our first quarter '26-'27 earnings call. I appreciate you taking time out of your busy day to connect with us. Before we begin, I encourage you to download and give you our quarter results and analyst presentation, which are available on the stock exchanges and our website. With me on the call today are our CFO, Mr. Dilip Jha, and our Investor Relations Head, Mr. Nishit Dave. As we begin this new financial year, one thing is increasing in the year in times of geopolitical uncertainty and extreme weather events, a nation needs a [indiscernible] reliable and domestically available units. As India's economy continues to advance, the importance of reliable baseload power to the country's growth story has become even more evident. During the quarter, India experienced a hotter-than-usual summer with sustained heat waves across most regions. New reached high temperatures, peak demand sort of [indiscernible] high of around 271 gigawatt in May '26. While overall energy [ condition ] rose by 8.4% on year-on-year to 485 billion units for quarter 1 2027. This has also put to rest concerns over any demand slowdown that has arisen in the previous year. [indiscernible] power was once again the main stay of fulfilling the nation's electricity needs during this period of surging demand. I'm immensely proud to say the Adani Power stepped up through this challenge. We achieved our highest ever quarterly power generation of 31 billion units and [indiscernible] 28.8 billion units, a growth of 17%, which was a result of improved PLS as well as greater operating capacity. We have once again demonstrated the strength of our efficient cost factory portfolio and operational excellence by reliably supplying power when the country needed the most. Financially, we have started the year on a strong note, posting our highest ever quarterly performance. Total continuing revenue for the first quarter of '27 is INR 17,936 crores, which is a growth of 27% over the corresponding quarter of '26. Continuing EBITDA without prior period items for the quarter is INR 6,983 crores. It is 22% higher year-on-year. The company has reported 47% higher profit after tax on year-over-year at INR 4,867 crores for quarter 1 '27, reflecting our operational profitability and excellent management of the capital structure. Beyond our financial and operational milestones, this quarter has been defining for our strategic growth. We are consolidating firmly on the past to expand our portfolio to 45 gigawatt. A major highlight of the recently completed quarter 1 was the successful acquisition of the stake of Jaiprakash Associates in various power assets under the corporate insolvency resolution process. This strategic move adds [ 180 megawatts ] Churk power plant to our portfolio, alongside a 24% stake in Jaiprakash Power Ventures and an 11.49% stake in Prayagraj Power Generation Company. These acquisitions further expand our reach and operational footprint. Additionally, we secured our revenue visibility further by signing a [ 25-year ] power supply agreement with the Maharashtra for supply of 1,600 megawatts of power on a long-term basis from a 2 x 800-megawatt ultra supercritical thermal power plant. We have announced the receipt of a letter of award for this PPE earlier in March '26. Our capacity expansion program is programming at an excellent pace. We are on track to commission this 1,320 megawatt Korba Phase 2 project this year, while the 1,600-megawatt Mahan Phase 2 project is scheduled for commercial operation in quarter 1 of next year. Furthermore, execution is advancing rapidly at Raipur Phase 2 and Raigarh Phase 2, which have achieved over 62% and 54% progress, respectively, and we have commenced execution for our 1,600-megawatt Mirzapur greenfield project and other projects. As you will be aware, we have already entered [ 24 gigawatts ] of BTG supply in advance and secured the land required for the expansion program. We have tied up 56% of our upcoming capacity already under long-term PPAs, and we are confident of tying up the balance capacity soon through ongoing and upcoming bids. Further, I'm thrilled to say the Adani Power has been ranked as India's most valued energy brand by Brand Finance with a brand value of USD 1.8 billion and a AAA rating. This is a testament to the trust our stakeholders place in us. Looking beyond horizon, we are entering new and exciting territories as we expand our thermal base. We are also diversifying into international hydropower projects and preparing ourselves for new opportunity in the nuclear power field. We are strongly committed to helping India meet its long-term development goals with the supply of reliable and competitive electricity, and I look forward to interacting with you as we progress on this part. Thank you. I would now like to hand over the call to our CFO, Dilip, to elaborate further on the quarter 1 results. Thank you, and over to you, Dilip.

Thank you, sir, and good afternoon, everyone. I will take you through the financial and operating performance for quarter 1 FY '27 and then share a brief update on our balance sheet and liquidity. So let me start with our operational factor. As Khyalia said, quarter 1 '27 was characterized by exceptional demand driven by consistent [indiscernible]. Consequently, power uptake under CPS improved significantly, while merchant prices also strengthened materially. In this environment, APL achieved a phenomenal operating performance. Our consolidated plant load factor jumped significantly to 78% in quarter 1 FY '27 compared to 67% in the corresponding quarter last year. Our consolidated power sales volume were higher by nearly 17%, reaching 29 billion units against 25 billion units in quarter 1 last year. This strong volume growth was supported by higher operating capacity, robust power demand and PPA tie-ups for our previously opened capacities at Butibori and Tuticorin power plants. Specifically, power sales under PPAs grew by 30% to 25 billion units. Merchant volumes were 4 billion in quarter 1 as compared to 6 billion in the last quarter last year, same-same quarter last year. Due to this, our tying up capacity in PPAs increasingly and incrementally during this period. Coming to revenues. I am very pleased to say that Adani Power has posted its strongest quarter yet in terms of continuing revenue and continuing EBITDA. Strong generation volumes combined with improved realizations translated into our strongest performance yet. Continuing revenue from operations for quarter 1 '27 increased by almost 28% to INR 17,550 crores. Total continuing revenue, which includes other income, stood at [ INR 17,936 ] crores, reflecting a 27% growth year-on-year. Our total reported revenue, including onetime payer prior paid item reached to [ INR 19,332 ] crores at nearly 33% increase from quarter 1 last year. Our tariff realization under PPA improved by 8% to INR 5.93 [indiscernible] and merchant and short-term realization improved by 13% to INR 7.04 per unit. Directly benefiting from the strong demand environment, our PPA realization include the fixed capacity charges of PPA that we have signed recently for previously open capacity that is in [ Butibori ] and Tuticorin. During quarter, we have reported a onetime net recognition of prior year revenues of INR 1,386 crores primarily due to the revision in historic energy charges under certain PPAs. Moving to profitability. During quarter 1 '27, we have focused core profitability stand despite an increasing fuel cost. Fuel cost for the quarter was higher up by 30% at INR 9,513 crores, which is driven by larger distill volume and higher imported indices -- imported coal indices. With these, our continuing EBITDA grew by 22% to [ INR 6,983 ] crores. Reported EBITDA surged by 36% to INR 8,359 crores. This improvement was primarily driven by higher volume and an improved PPA contribution. At the bottom line, profit before tax on a continuing basis registered a strong 29% increase to INR 4,914 crores. Reported profit before tax jumped to nearly 50% to INR 6,300 crores. Ultimately, our profit after tax for quarter 1 FY '26 rose by a stellar 47% year-on-year to INR 4,867 crores, up from INR 3,305 crores in quarter 1 '26. Let me now touch upon the balance sheet and our financial discipline. Despite our growing capacity, recent attributions and an ongoing capital expenditure program, we have maintained very tight control on our finance costs. We continue to follow a conservative capital management policy. Our strong liquidity and healthy profitability have helped us keep our leverage in check. As of June 30, '26, our total debt outstanding stood at INR 58,381 crores, and our net debt stood at INR 47,643 crores. Our rapid capacity expansion is largely supported by predominantly self-financed capital expenditure strategy, strong project execution, track record and in-house management capabilities. Together these, factors give us special cost advantages and ensure that we deliver our capacity addition in a timely and cost effective manner. Now to summarize, we delivered our highest operating and financial performance on a continuing basis this quarter. Capacity utilization remained exceptional with PLF of nearly 78%. We are expanding both organically and through strategic acquisitions. Our balance sheet remains robust and supportive of our 45-gigawatt reason. Thank you for your time and your continued confidence in Adani Power. We will now be happy to take your questions. Thank you.

[Operator Instructions] The first question is from Abhinav Nalawade from ICICI Securities.

My first question is whether the -- I mean, the Jaiprakash, will it be consolidated? And do we have some expansion plans at Nigri and Bino? Also what the -- what will you do with the [ 11% ] shareholding at the Prayagraj?

Are you asking related to consolidation in the accounts or you are asking related to the...

With regards to accounting. Yes, accounting.

Yes. So thank you, Abhinav. Let me brief you. For JPVL, in JPVL, we have also taken 24% stake. And there, we have very good assets over there. For accounting purpose, we are considering the respective percentage. So this is an associate running power. So the percentage of profit in JPVL, we are consolidating to that extent in APL profitability.

So P&L and balance sheet is not getting consolidated. It is only the share of profit is getting consolidated. So the other issue with regards to the opportunity of expansion at Rina and Nigri, there is a good opportunity because both locations, a lot of land is available. So fortunately, going forward, we will have this as a land bank available where -- whether we want to go for expansion of thermal or whether we want to go for nuclear because in case of Gina, we are also exploring the possibility whether we can develop their nuclear, whether the site is -- condition from the point of view of various requirements of nuclear. So we have not yet planned anything, but these are the 2 sites where a good land bank is available. And going forward, these sites will be obviously available for any growth opportunity.

okay. Sir, second question is on nuclear. You've mentioned for the first time that you'll be targeting capacity of 10 gigawatts by 2035. Just wanted some granular details on it in terms of is there any technology tie-up where the domestic technology available with [ T-cell ] or will it be sourced -- I mean, will it be imported. Secondly, on the fuel sourcing as well as when can we see some tangible traction in terms of the first nuclear power plant. Is it contingent on the final guidelines from the government? Can you give some details? That will be helpful.

So you have said rightly that it will be dependent on the government guidelines and government has yet not come out with the rules under the act. So unless we get the clarity on that aspect, it would be difficult to decide on these things. Nevertheless, we are evaluating both domestic and the outside technologies. And it will all depend on what would be the cost effective in terms of per megawatt cost because the end of the day, electricity has to be viable for the Indian consumers and the type of rates, which are affordable to discount, the project cost has to be in that, let us say, range. So we will take all these costs related to technology, whether it will be domestic, whether it would be foreign technology. So all these things can be finalized only when the rules are in place. So at present, we are waiting for the rules to come. As soon as that happens, we can move fast. We are keeping our sites ready from the point of view of their suitability and where the studies are being carried out. So that is the status today.

Sir, my final question is on the receivables from the Bangladesh PPA. [indiscernible] numbers and a corresponding number a year ago.

Yes. For the quarter ended, the receivables are also really in line with as we are and also getting payment on a regular basis. Last month also, we received also near about USD 100 million. So on an average monthly basis, we are getting USD 100 million payment. And specifically for June quarter, our receivable is near about USD 400 million. And we are expecting that every month on an average, we will also get from TPP, so we are about USD 100 million. It will be continued. And it will be slightly higher than our monthly be. So we are expecting that the receivable, so the liquidity and realization will also increase over the period of time. And also, there is significant, if you will, compare on a quarter-to-quarter basis. So in first quarter, last financial year, the receivable was all-time high. And as you know, that in June, it's -- so in June, July last year, we have received a significant amount onetime. That had helped us a lot in reducing this receivable of Bangladesh. So the receivables have significantly reduced on a quarter-to-quarter basis, and we are getting on an average USD 100 million from these things.

The next question is from Apoorva Bahadur from IIFL Capital.

Congrats on strong results. I see in your presentation, you have highlighted an incremental capacity plan of [ another 3 ] gigawatts. Can you throw some light on this, sir? Where will it be used? Any plans for it on a captive basis for the group companies? Or do we expect more to be made? And how about the ordering -- equipment ordering for this?

Us, 3 gigawatts can be construed from, let's say, 2 angles. One is we have already got a 24% stake in the Jaiprakash Associates. So that itself is 2,240 megawatt. So going forward, let's say, we can get more stake in that than this itself can be considered as, let's say, part of this another 3 gigawatt. Moreover, a lot of opportunities are arising because this summer has given a clear indication to the policymakers that a lot of thermal power projects are required, baseload is required. And obviously, the nuclear will take some time even if we get the rules in your future. Any nuclear project is going to take from the stage of planning to, let me say, commissioning 7, 8 years. So during this period, the thermal would be the only source, which will provide the baseload power. So obviously, a lot of states are contemplating to come out with the bids. If you will see the resource allocation study of various states, every state is having huge deficit and requirement for the next 4, 5 years, 6 years. So we expect that many more bids will come from the discounts. And therefore, we have thought of that probably will need to add few more capacity because the present 24-gigawatt capacity, which we have planned, that capacity is now tagged to the specific locations also. So if any state will come with the bid, which will, let's say, is made specific to that state location, in that case, we have to obviously tie up the new capacity. So keeping that in mind, the additional 3 megawatt is considered and planned.

Okay. That's helpful. Sir, also on your nuclear plan, I believe the target has increased from 5 to 10 gigawatts and the red line or the target time line is around 2035. By when do you expect to actually order these plants so that they commission by 2035?

As I said earlier that only when we get the rules under the act from the government of [ Ria ]. So we are keeping us ready but ordering can happen only when there is a clarity about the rules of this again.

No, no, fair point. I just wanted to understand what's your take on what would be capital execution time line for a nuclear power plant.

As per our standard of execution, it should take around, let us say, maybe that is not yet -- we have not experienced this, but it should take at least 5 years.

5 years, that's quite a short time line, I mean, against what we are typically conditioned to see any ways. I think you gave some details on Gorda. Would be very helpful if you can provide probably the generation number. And also what's the realized tariff for this quarter?

Just a moment, sir.

Sure, sir. In the meantime, if I may ask one more question on...

Yes. So [indiscernible] generation in terms of unit, this quarter in Goa, so the unit we sold, 2.519 billion units as compared to last year same quarter, 2.362 billion. So there is an increase in terms of unit we sold to some TPP during the quarter realized. And in terms of realization, our total revenue for this quarter is INR 2,473 crores. As against the same quarter last year, it was INR 2,135 crores.

Very helpful, sir. Sir, also, if I may just squeeze in one more question, and this is on the agreement, which we have with Adani Energy, right? So another sister company of yours, Adani Green, had an agreement of sharing some capacity, locked in returns with Adani Energy. Do we have any similar plans? And how much of that capacity would be earmarked and what tariff?

You are talking about this 25,000-megawatt PPA?

I'm talking about this -- the energy management solution business, which Adani Energy has incubated. And I think for supply over there, they are tying up with group companies for capacity.

So I do not appreciate the question. Are you asking any question related to Adani Power because neither the Green is without Adani Power nor the [indiscernible] is with Adani Power.

Right, right. So we don't have any PPAs with Adani Energy?

No, we don't have.

Okay. Okay. And sir, lastly, I think I also see that you have taken an approval for an equity raise. The balance sheet is very robust for us. So is there any specific use case you want to deploy this capital for?

Yes, the Board had approved this [ QIP ], and we have requested our shareholders through EGM. And this will be an enabling provision to be ready and as of this [ QIP ]. As of now, [indiscernible] so we have requested to our shareholders. And the capacity expansion, the [ mass ], we have already taken the CapEx program of more than [ INR 2 lakhs crores ] over the period of next year. At the same time, we are generating heavily internal from our operating assets. So the interim gap, we are meeting to the short term the requirement that we are taking from the market. So this is this QIP, the enabling provision we have requested to our shareholders through EGM.

[Operator Instructions] We move to the next question. The next question is from Dhruv Muchhal from HDFC Asset Management.

Sir, first question is in the prior period first -- prior year first quarter and current quarter, can you help us what was your merchant capacity? When I say merchant, it is nothing beyond, say, 1 year PPA. Because what I see is your merchant volumes on an absolute basis have come off, so 4.3 billion versus 5.6 billion units last year quarter. But I believe your merchant capacity has also come off, right? Is that the right understanding? [indiscernible] merchant capacity is converted to PPAs, if I'm not wrong, in that quarter. So if you can help on quantum.

Yes, your understanding is correct. The merchant capacity has reduced. Specifically, during my speech, I said that for our Butibori plant as well as also our Tuticorin plant, earlier these plants are in merchant basis. Now these are under PPA. Specific to the volume, this quarter, the volume is almost 4 billion units. And the same period last year, it was 6 billion units, so [ 130 ] the reduction in terms of the merchant unit. And there is capacity reduction in open capacity.

Got it. So Butibori is 600 megawatts, right? And your current Tuticorin project is also 600-megawatt effectively, which was open in, so 1,200 megawatt effectively got converted from, which was last year same period merchant, which is now under PPA.

Correct, as well as Butibori is also 600, and it is fully tied up now under the PPA. Some capacity of even Raipur is tied up under the PPA with the Karnataka. So a lot of reduction has happened. And as we said that, going forward, we would like to tie up almost everything through the medium term or the long term PPAs to reduce the volatility in the market prices.

Got it. Sure. And sir, second question is, we see Maharashtra has approved a PPA, which is to be sold to Adani Energy Bombay, but it seems you all have a role there. You will be supplying 540 megawatts thermal. So it's -- I mean, it's partly related to the earlier question. So probably Adani Energy is the intermediately, but you become the supplier of thermal power there. But sir, I just wanted to understand how does this work for you. Because it's an RD-RDC contract and you have a thermal plant. Now it's probably 540-megawatt. You will probably have to ramp it down, ramp it up. But does the cost of that not owned by you and it is owned by the intermediary? I'm just trying to understand because we don't see that kind of ramp up, ramp down in the thermal plant or you gave assured power -- I mean you get your assured fixed charge by running the plant at the minimum technical load or higher than the technical load and you're not impacted by this arrangement?

So presently, as we said that we already tied up under a medium-term PPA with the Maharashtra, MSEDCL. So once we will sign because this has to be signed between the -- us and the intermediary. So once you will sign the PPA, it would be a PPA based on the capacity targets. So it will not be a power supply in terms of it only. It would be a capacity target. So it would be a PPA like any other PPA of thermal power project. So making it RTC, it is the, let us say, exposure taken by the PDSL.

So for you, the contract structure is exactly similar to like a typical PPA, what we are generally used to. And the ramp-up plan norm and all those things, you get your technical whatever minimum and all those. And all those volatility gets handled by the other party.

Correct. Correct.

Next question is from [ Vivek Kramatrishan ] from [ DSP Mutual Fund ].

Like you rightly said that you have been maintaining excellent financial discipline. Now in terms of -- you have a large expansion plan. Over the next 2 to 3 years, how do you expect the net debt to EBITDA move especially because you'll have also one-off acquisitions and so on because the opportunities are very good? And what can we expect in terms of net debt-to-EBITDA guidance from the company?

So as I was explaining that we are running a CapEx program of more than INR 2 lakhs crore and on a yearly basis, we are generating an FF of INR 20,000 crores. So in the same period, there will be an FFO of more than 1.4 lakh crore. There will be an interim requirement of around [ 60, 1,000 crores ]. That will take from the market. So far, net debt-to-EBITDA is concerned, we are maintaining a very robust capital management program. And also, we are answering our deployment of single penny in the best possible and effective manner. Net debt to EBITDA as on date, so on June, it is slightly higher than the 2. And what we are expecting that it will not cross net debt to EBITDA [ 3 ] at any point of time. So this net debt to EBITDA between 2 to 3 will run over the period of time.

The next question is from Girish Achhipalia from Morgan Stanley.

I had a couple of questions on Slide 25. We have long-term PPAs that are in the market for 13.2 gigawatt and on the same side, we have an untied capacity of 11.1. Our historic strike rate has been about 2/3 on the market in the last 2 years. I wanted to understand like which are the likely states, which we would probably see the bidding close in the next, let's say, this fiscal. And will there be more such states come through in the next year because if I assume 2/3 get through, we'll still be lining up with, let's say, 4, 5 gigawatt of untied capacity right now. And one question as a follow-up on that MSEDCL contract of 2.5 gigawatt, which is RD RTC. I'm not sure whether this is captured in the PPA bucket that you have right now because on the left side, where you have the capacity tie-ups, there is 10.2, which is tied up in progress. So would that PPA be counted here? And what is the quantum of PPA here? If you can just clarify on that.

So the numbers you have already stated as regards to the numbers stated on the slide is considered, it is already given which bids are already under progress, which is UP is 4,000, Gujarat is 4,000, [indiscernible] is [ 1,320 ] and West [indiscernible] is almost 3,800. So 13,000 megawatts of bids are there. And obviously, we would be the, let me say, strongest competitor for this bid. Apart from this, if you will see the resource advocacy study of various states, many states are in a deficit. The hard is having further deficit. We have heard that Sentry has also sought the coal engage for carrying -- coming out with the bid. So there may be many more states. So we can't say exactly when they will come out with the bids. But obviously, the resource adequacy study gives an indication that many of the states are hanging requirement going forward up to 2032, '33. So that gives us a strong signal and confidence that we will get our capacity tied up. As regards to 2,500-megawatt PPA is concerned, as I stated in the last earnings call also that this is a supply contract. It is nothing to do with the [indiscernible] this long-term sort of a capacity. And that supply contract had the requirement of 51% from the green sources. So therefore, this contract by nature, is, let's say, where we can supply some of our small left out capacity of thermal, small left out capacity of green. It can grow the solar when the battery DSP. So this PPA would be obviously run like a trading platform. And we'll decide going forward, which company will let us say, actually run in this PPA. But this PPA will need the multiple sources of supplies from various sources. And it would be pulled at one platform and then will be supplied to the [ ministry ].

Understood. Sir, my second question is on capacity expansion timing and thanks for the disclosure over the annually putting out what is expected. In the next 2 years, in FY '27 and '28, you are expecting 1,320 and 1,600 megawatts. Just wanted to understand which quarters and which plants are these likely to be? Are we likely to have them back ended? Or it would be evenly split FY '27 this year and FY '28?

So for this year, we assume that it will come before, let us say, December end. That is the broader expectation. And as regards to next year, Mahan is concerned, we are expecting first unit in first quarter and obviously, then second unit, though it is expected that a unit should high normally gap for 6 months, so if you go by that standard, then obviously, that will come in the third quarter. But we are trying to bring that also in the second quarter.

Last question is on capital expenditure. If you can outline for next 2 to 3 years, what will be the annual run rate that you would be incurring?

Just a moment. Yes. So TCF, we are expecting that our CapEx will be near about INR 23,000 crores. Next year, it will be more than INR 30,000 crores, and thereafter it will about INR 33,000 to INR 35,000 crores.

[Operator Instructions] The next question is from [ Shweta Rakesh ] from Cantor Fitzgerald.

[ Shweta ] on the line on behalf of Manish from Cantor [indiscernible]. I just have a quick question on a funding mix that we talked about earlier in the [indiscernible] QIP. What is the expected administration time line? And how should we model [ per ] share equity dilution in there?

[ Shweta ], we could not hear you clearly. Can you speak a bit closer to the phone or pick up the receiver and speak?