JSW Energy Limited ($533148)

Ladies and gentlemen, good day, and welcome to JSW Energy Q4 FY '26 Post Results Earnings Call, hosted by PL Capital. [Operator Instructions] I now hand the conference over to Mr. Vishal Periwal from PL Capital. Thank you, and over to you, Mr. Periwal.

Yes. Thanks, Michelle. Good afternoon, everyone. So I welcome you all for the quarter 4 earnings call of JSW Energy. Today, we have a leadership team of JSW Energy with us led by Mr. Sharad Mahendra MD and CEO; Mr. Chandrasekaran Prabhakaran, CFO; Mr. Bikash Chowdhury, Head IR and ARM. I'd like to thank you to the management for giving PL Capital, the opportunity to host the call. And now I'm giving the speaker to Sharad for the brief from him, and then we'll have a line open for Q&A. Over to you, sir.

Thank you, Vishal. A very good afternoon to everyone, and thank you all for joining us today. It is my pleasure to share the highlights of our performance for the quarter and the year gone by. FY '26 has been an exciting year where we began to translate the bold ambitions of our Strategy 3.0 into hard business outcomes. During financial year 2026, we increased our installed capacity by 2.6 gigawatt to reach at 13.45 gigawatt with generation going commensurately by 58% year-on-year. The company reported its highest ever annual EBITDA of INR 11,041 crores in financial year '26. Before I delve into our performance, I would like to share some sector observations. India's power sector continued its structural transformation in FY '20 though demand dynamics were different from what we saw in recent years. Total power demand for the country grew modestly at 0.9% in FY '26, the most muted growth in last 5 years, driven by an extended monsoon season that weighed on consumption through the first half of the year. However, from quarter 4 FY '26 onwards, we saw a fair demand recovery with demand growth rebounding to 2.1% in quarter 4. In FY '27, so far, year-to-date demand growth remained healthy at a growth of 4.6% year-on-year. Overall, the season softness that we have seen in the first half of FY '26 does not, in our view, alter the medium-term structural demand story in any way. India's growing industrialization, urbanization and rising per capita consumption continue to underpin a 5% to 6% CAGR in power demand over long term. [indiscernible] demand on 25th April 26 reached the 256 gigawatt and with the summer of 2026 now commenced and expect it to be severe, the system is positioning to handle a new peak of approximately 270 gigawatt higher than the 250 gigawatt record seen in May 2024. On the supplier side, India added 64.9 gigawatt of new capacity during the fiscal, of which renewable energy accounted for 50.9 gigawatt, translating to 78% of total capacity additions. Nonfossil sources across 50% of total installed capacity for the first time in FY '26, a landmark moment for the sector. The ongoing best Asia crisis has further reinforced the need of energy self reliance for India. India's core reserves insulate us from proved volatility and advantage the country is actively leveraging. Structural shifts towards induction heating and EVs are expanding electricity demand, while data centers are also expected to anchor the long-term uptake in India. The merchant market remained soft through most of FY 2026, averaging approximately INR 3.86 per unit on exchanges, reflecting muted demand. Despite this, in line with what we have maintained, our FY '26 merchant realizations commanded more than 20% premium to average exchange prices, which are driven primarily by strategically executed back-to-back short-term contracts. We are already seeing tariffs from us in FY '27 as summer cooling demand builds. As mentioned earlier, till date that the power demand is up by 4.6%. Now coming to company performance. FY 2026 has been defined by scale and integration. We have added 2.6 gigawatts of installed capacity during the year via calibrated strategy of organic and inorganic route, taking our total operational base to 13.4 5 gigawatt, making us 1 of the largest diversified power generation companies in the country. The additions span organic commissioning across wind to 40 megawatts solar 305 megawatts, hybrid 451 megawatts and hydro 240-megawatt assets. And the full integration of all the inorganic acquisition was completed in FY '25 and FY '26. The integration of O2 Power, the 4.7 gigawatt urinal energy platform that we acquired in April 2025 has progressed well. O2 Power's operating capacity has grown to approximately 2 gigawatts at the close of FY '26 with active construction underway across the remaining portfolio. It's asset quality underpinned by our diversified geography, long-term PPAs with credible counterparties supported this 100% connectivity and majority of the land and rich tariffs has met our original underwriting assumptions. Coming to thermal. On KSK Mahanadi, our 1,800-megawatt operational capacity delivered robust performance during the year, driven by Synergy's post acquisition. We have been focused on implementing cost efficiencies and improving plant performance. And I'm pleased to report that PLF has remained healthy through FY '26 and among the top 10 plants in the country in the first full operational year in our hands. The ramp-up plan for the remaining units of plant is progressing on schedule with water and rail arrangements strongly in place post our recent acquisition of KSK's water and rail SPs. On the organic front, we commissioned 1.24 gigawatts of new capacities during FY '26. Notably, the 240 megawatts [ Kutehr ] hydroelectric plant, which was commissioned in quarter 2 of FY '26 is one of the fastest time lines for a project of its scale, further cementing our position as the largest private IPP in hydro sector. We also acquired 150-megawatt [ Tiong ] hydro power plant from tacraft, which is at an advanced stage of completion. I'm happy to tell that 50 megawatts of this has already been commissioned on 7th of May '26, and balance 2 units are expected to be commissioned within this quarter before June '26, which was against the original plan of October '26. This timely commissioning will help us catch the ongoing hydro season, adding meaningfully to the top line and bottom line. Alongside renewables, thermal power has regained its prominence as reliable baseload and we made rapid price on this front as well during FY '26. Following the signing of 1,600 megawatt Salboni PPA in FY '26, we secured an additional 1,600 megawatts and signed the PPA for the same location, making Salboni our largest single site asset at 3,200 megawatts. On the 1,600 megawatt project construction has commenced, and equipment procurement is on schedule. As we have informed in parallel, we have taken strategic steps to derisk our thermal supply chain through the strengthening of Toshiba JSW joint venture for turbine generators and the acquisition of the power boiler business with the latter transaction expected to be consummated within the next 2 quarters. Turning to our under construction portfolio. JSW Energy is currently building 14 gigawatt of generation projects, all of which are fully tied up under long-term power purchase agreements. This high-quality, fully contracted, under construction book gives us strong visibility into future EBITDA. This fiscal year, we are looking to add about 3 gigawatt capacity and a CapEx spend of around INR 20,000 crores for the year. On our thermal optionality at KSK, we expect the first 600 megawatts to be commissioned by quarter 3 of next fiscal. Beyond this, we have a robust project pipeline of approximately 4.6 gigawatt where letters of intent have been secured. Our total logged-in capacity now stands at [ 32.1 ] gigawatt placing us firmly on track to deliver the 30 gigawatt target of generation by 2030 under Strategy 3.0. Coming to energy storage. We recognize the critical role it plays in integrating renewable energy and ensuring grid stability. Our long-term storage capacity now stands at 29.6 gigawatt hour of which 3.2 gigawatt hour are in battery energy storage and 26.4 gigawatts are in the remunerated pump storage space. Further, our 5 gigawatt or battery assembly facility in Pune was commissioned in quarter 4 of FY '26. And the commercial sales of the battery storage have already commenced. This plan will position us to meet domestic content requirements for battery energy storage systems as and when mandated by the government of India. Energy storage this past becoming a mainstream infrastructure investment, and we are well ahead of the market in building this capability. Additionally, our wind blade manufacturing facility at [indiscernible] and Gujarat scheduled for commissioning in the first half of FY '27, would provide advantage to us in terms of lower capital cost for wind projects due to savings in logistic costs and foreign exchange, thereby strengthening our vertical integration. Coming to the operational performance for the quarter. We have added organic renewable capacity of 118 megawatts during the quarter. Our net generation for quarter in FY '26 rose by 48% year-on-year to 11.7 billion units, driven by a 68% year-on-year increase in renewable energy generation on the back of capacity additions across wind, solar, hydro and coke power assets. Before I move to thermal, I would like to mention about the power curtailment regarding the power curtailment due to evacuation constraints, I would like to say that about 160 million units were curtailed for us. But a significant portion of this 160 use is under permanent recovery. So we are getting the tariff for the same, that's not impacting our revenue. Only a small portion of this curtailment has resulted in a revenue loss of around INR 16 crores during the quarter and approximately for [ INR 450 ] crores during the year gone by. This curtailment, however, is expected to be over by July 26 with the expected commissioning of new evacuation line. Thermal generation grew 43% year-on-year to 8.8 billion units driven primarily by robust uptake at our Mahanadi and Utkal plants. Our KSK plants [indiscernible] for quarter 4 FY '26 remained robust at 93%. Further, our overall thermal portfolio maintained a healthy PLS of 78% for the quarter and 73% for the full year. Compared to this, country's average thermal PLF stood at 68.7% during the quarter and 65.8% during the full year. I would also like to address one operational joins from the quarter. The KSK Mahanadi experienced some PPA [indiscernible] down attributable to a transient demand softness in the region. However, we successfully monetized the backdown volumes through short-term market sales, mitigating any major revenue impact. This has since normalized with the onset of summer and the consequent surge in demand. The KSK plant impact registored an impressive EBITDA of over INR 3,300 crores in FY '26. Also driven by fuel cost reduction through optimizing sourcing of coal from near wire lines, resulting in lower logistic costs, just like we did what we did for our Utkal plant as well. Further, at Utkal, both our units are fully operational, and the plant registered a PLF of 75% in quarter 4 of FY '26. Now driven by full tie-up that we had done earlier -- our [indiscernible] part PLF also stood robust at 79% in quarter 4. With open capacity now at about 5% of our total installed capacity, and a 25-year 400-megawatt PPA for the Utkal plant at INR 578 per unit and another 2-year PPA for 115-megawatt PPA with [indiscernible] with effect from first April 2026. The quality of our underlying EBITDA has improved substantially. The predominant share of our remaining open capacity is domestic coal-based with plants closer to the mine which reduces sensitivity to global coal prices volatility and keeps our merchant breakeven economics highly competitive. Now coming to the outlook. FY 2027 is expected to be a year of accelerated earnings delivery. The sizable projects commissioned during FY '26 will stabilize and contribute to full year EBITDA driving a meaningful step-up in our financial performance. India's power demand recovery with the government projecting peak demand of 270 gigawatt this summer, in the medium term, CAGR of 5% to 6% provides a strong tailwind for our growing portfolio and remain fully on track towards our FY '30 targets of 50 gigawatts of generation capacity and 40 gigawatt hour of energy storage. We remain committed to disciplined capital allocation. Every investment must meet our mid-teens return thresholds and our balance sheet management continues to be guided by our leverage guardrails while net debt has risen as expected during this phase of accelerated investment, the quality and our contracts on our growing asset base means that free cash generation will improve progressively, supporting, deleveraging on a path towards 2030 net debt-to-EBITDA target of approximately 5 to 5.5x. Finally and equally important, on the people front, we are proud to retain our great Place to Work certification, a recognition that our culture and people practices continue to keep pace with our growing scale. Also, we have been rated amongst top 525 places in the manufacturing sector in the country. Moving to our financial performance for the quarter. Details that most of you have had the opportunity to review ahead of this call. Supported by our robust quarter 4 generation growth of 48%. Our EBITDA during the quarter rose 72% year-on-year to INR 2,602 crores. resulting in an all-time high annual EBITDA for the company during FY '26. On the bottom line, our profit after tax came in at INR 574 crores, up 38% year-on-year and tax to shareholders stood at INR 372 crores. As you may know, we have already served a notice to exercise our call option in KSK Mahanadi to acquire the balance 26% stake. The minority outflow should materially reduce once we consummate the same. Further, our cash profit to the shareholders for the quarter remains robust at INR 699 crores. Our cash returns on net worth adjusted for our investment in JSW Steel shares remained strong at approximately 18%. Revenue for the quarter 4 FY '26 grew 39% year-on-year to approximately INR 4,851 crores. Our trajectory probably anchored in the robust expansion of our deviation capacity. As our newer assets continue to be capitalized on the balance sheet, depreciation and interest costs have risen accordingly. Depreciation grew almost 1.7x during the quarter 4 on a year-on-year basis, while interest cost increased approximately 2.4x, both consistent with the scale of capital deployment underway. On the leverage, excluding capital work in progress related debt, our net debt-to-EBITDA stands at approximately 5.2x well within our financial guardrails. Our liquidity remains ample with cash and cash equivalents in excess of INR 10,000 crores. Out of the INR 3,000 crores [indiscernible] allotment that we have done recently, INR 1,125 crores has been received in quarter 4. On the cost of capital, consistent with our earlier guidance, our weighted average cost of debt declined by approximately 67 basis points year-on-year to 8.36% as of March '26. This reflects our healthy credit profile and the sustained confidence our lenders and rating agencies placed in us. Finally, on working capital, total receivables as on March 31, it stood at around INR 3,240 crores, translating to debtor days of 62, a sharp and meaningful improvement from 76 days in the corresponding quarter of the prior fiscal. This reflects both improved collection disciplines and the evolving counterparty profile of our portfolio. The central message is that significant capacity additions we have executed over the past several quarters are now visibly converting into higher generation volumes and stronger cash flows. We expect this momentum to build further through the remainder of the fiscal and into FY '27. Thank you, and that concludes my opening remarks, and I'm now happy to open the floor for questions. Thank you.

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

My first question is, sir, I think what is your guidance or are the asset commissioning for FY '26 and FY '28, I think you mentioned to do 3 gigawatt in FY '27. Is it possible to break down this been solar and also give FY '27 number possible?

see the thing is FY '27, as I have said that approximately close to about 3 gigawatts of capacity additions will happen, which will be a mix of solar, wind and hybrid projects. So the breakup between solar and wind depends on what kind of project, what kind of hybrid, which is there. But as per the PPA terms, we can say that. But maybe you can say in terms of if I have to do a percentage maybe out of 3 gigawatt, about close to about 35% to 40% will be bank rest all is solar.

The second question is, has the amount to be paid for minority acquisition for KSK Mahanadi. Is it crystallized?

if you -- can you help us with amount?

Yes, capacity, please? No, I think it's not excessive. I think the process is currently on -- we can't comment anything at this point in time. I think, but it is kind of probably by end of Q2 is what we'll have some number on

Just my last question, how are you thinking about PPA for KSK Mahanadi, the last year is likely to remain on the merchant?

See, the thing is that PPAs definitely, there are demands from different states, which are there. And the discussions are on meeting with our time lines of commissioning of pursuit and the balance 2 units. The discussions are on various states won't be power. So accordingly, as and when the PPA time requirement comes, we'll be definitely participating but however, to note that this being close to the mine and the low fuel cost also gives us a leverage to the merchant also. But in the longer term, we will prefer to be -- the strategy is to have a long-term PPA pods.

The next question is from the line of Sumit Kishore from Axis Capital.

My first question is on the 3 gigawatts that you're looking to commission in renewable in FY '27, what would be the broad phaseout of commissioning of these capacities from Q1 to Q4, if you could give us some sense.

You see the thing is that some of our projects, which are at advanced stage of commissioning. So we, of course, giving exact numbers will be difficult, but you can say that maybe it is uniformly divided between H1 and H2.

So 1/2 and 1/2, Okay. The second question is on CapEx. So when you said about INR 200 billion of CapEx I mean the free cash flow that you are generating right now or basically your EBITDA less your net interest cost and the tax adjustment, that seems to be enough to take care of the equity requirement for INR 20,000 crores of CapEx. So is there any thought process in terms of raising equity funds beyond the infusions that are coming through preference shares and the warrant issuances to promoters.

[indiscernible] speaker.

I think similar to what you understood is right now with the existing 20,000, the cash flows would will generate and with this kind of the end debt to debt to EBITDA. I think within those ratios, we will be able to easily manage this INR 20,000 crores which we talked about. In case like we want to -- so we have this additional INR 18 crores of which we can kind of urine at any point in time. So if you again what's the end of it kind of postpone or contract this system, because we have this leverage to do.

Okay. So just one last question, trying to understand the broad breakup of this INR 20,000 crores CapEx because there is some allocation that should start happening to the Salboni project, something to the battery [indiscernible] project that you're commissioning the pump storage hydro -- so just to understand because what kind of CWIP should we expect for the thermal project on storage hit by the end of the financial year.

You see, when you talk of thermal, definitely, yes, when [indiscernible] work has started and also the Pampers project for which we have got the clearance from the environment and forest Stage 1 [indiscernible] and nd it's definitely some investment will go in these projects. But we have to remember that normally, the year 1 of such projects doesn't entail significantly large investments. It is only the order placement and some kind of civil work with starts. So it is a very small percentage of the payment which flows and then gradually, it increases. So it is not significant. But if you have [indiscernible] to break up, it can be maybe INR 20,000 crores, we have said, you can say INR 400 crores to INR 5,000 crores will be for the these projects, enabling projects, which are the thermal project and the pump stores, the sale will be in the wind and solar space and battery energy.

Very clear. Just one keeping question to understand. What was the CWIP for your RE projects at the end of FY '26 because you're going to commission 3 gigawatt. What percentage of the investment has already happened just to understand?

So we have a total of about INR 17,300 crores of see, out of which about close to INR 11,200 crore is for honey and the balance is for the volume numbers.

The next question is from the line of Ketan Jain from Avendus Spark.

Sir, interest to understand the 2.6% we call of capacity addition, how much of it is acquired from Osan how much of it is

See, out of this 2.6 gigawatt, it is 1.3 gigawatts which was the acquired capacity and the rest all it is 50-50 that is acquired and rest all is the greenfield capacity which we have commissioned.

Understood. I understand that there were challenges this year. So are you still seeing challenges to execute our commission plans on time for seller

See, the thing is we have been all reading and all knowing about one of the biggest challenge has been the project readiness and the power evacuation curtailment, the delays because we know that last year, Government of India had planned for the evacuation networks increased by 15,000 circuit kilometers against this -- the actual which happened was only 9,500 cert kilometers. So those challenges, we see that. But otherwise, we are insulated because the challenges are whether the land availability or whether the connectivity. And we have that 100% of that, then only we start over. So we don't see, of course, projects execution, day-to-day issues of right of way and others is something which is part of the project, which is planned and nothing unexpected. So we don't see any challenges and with large significant portion of our capacity at advanced stage of commissioning. We are confident at this time that definitely 3 gigawatts of capacity addition will happen without any challenge.

Understood. My second question is, are we seeing any increase in cost or supply chain disruptions due to the lessons and impact on our IRR is there any impact?

See, one thing I would like to like to say that if we talk of whatever the commodity cycle price increases we have seen in general and the currency impact on import-related components. For wind, as I have maintained earlier that we signed a fixed-price contract for 2.4 gigawatts of being turbine supplier from the same wind, China which is fixed in terms of the pricing and fixed in terms of the currency also, which we did in around April or March, April 2024, we did that signed that contract. And that contract quantities as suppliers have recently started. So we are insulated from that for maybe next at least 1.5 years on wind side, there is no impact to us. Of course, minor impact on the domestic purchases, if the steel prices goes up, the tower cost goes up because that is all steel, but that is a very cyclical industry deal. So we time our buying bulk mine accordingly when that is the best suited for us. So we are largely not impacted even if there is a small impact with the commissioning of our blade plant in India, that will further help us because of the huge reduction in the logistics costs, both in terms of the ocean freight from China and also the local logistic costs. So all those things put together, we remain insulated from any cost impact for next 1.5 to 2 years. On solar front, with what we have been seeing, the increase in solar cell prices, the currency impact because of the solar imports from the cell imports from China. I'd like to say that even if the ALM comes for solar sales also for all PPAs, what we are executing next 2, 2.5 years is all before the date on which we are allowed as per the regulation, the rule that the ASL imports from China will continue. So to a large extent, we are insulated. Of course, still also is a cost -- some portion of the cost on this. So the same as we are doing for wind tower steel purchase, we are timing our purchase to have a minimal impact on our solar projects and our benchmark to return IRR or mid-teen IRRs that remains protected.

Understood. Great answer. Just last question. At the industry level, is there any update on the unsigned PPE that we [indiscernible] Are things moving the things moving in that case?

No. Right now, we are not seeing because there are enough PPAs which are signed and which are to be executed for next 2 to 3 years' time. And with the evacuation challenges which are there, which are going to ease out only by 2029 not before that, we are not seeing any significant movement on the signing of the PPA for the unsigned capacity. That status remains as it is what it was last time that we met.

Understood. Just the last, if I could squeeze in. What is the BSS patties right now? And does it impact our project equation? Just question last

See, BSS, can you repeat the question?

No back price, like the CapEx for bispecs.

See, the thing is when we are insulating definitely, we have seen that there have been price increases which have happened -- but as I told you that we have been able to optimize our costs by starting the assembly plant within our facilities -- so whatever impact on cell pack prices are, we remain much more competitive as compared to the best imports which are coming with our facility commissioned in quarter.

Understood. What would be the pack price right now, sir?

It is varying. Again, if you are a Tier 1, Tier 2, very difficult to give a number, Tier 1, Tier 2, Tier 3 suppliers, whether it is a 3-year warranty, but it's a 5-year warranty. It depends -- so very difficult to give a specific number.

The next question is from the line of Apoorva Bahadur from IIFL Capital.

Sir, just sort of delving deeper into this 5 gigawatt or best cell-to-pack assembly plant that we are operationalized. Can you provide some color on how you're thinking about the margin profile of this business, how much should be the revenue contribution that we start building in our models? And have you built in your order book?

Yes. So you see the thing is that this is in a ramp-up stage and we'll be taking care of my own captive requirements as well as because once this capacity ramp up and stabilization takes its own time, maybe going forward, definitely, the in-house requirement as well as to the outside market. we will be definitely looking for outside market. We have bought some orders. But right now, the testing of the products are going on and the necessary approvals, which we attract very soon, and then we'll be going into the marketplace. So then only we will be in a position to come out with what is the revenue and the finance numbers on this. Maybe next time, we will definitely like to share on that.

Okay. And sir, where are we importing ourselves from and which manufacturer in China.

There are -- there are multiple, but definitely, we are concentrating only on Tier 1 suppliers definitely, and we will be porting from [indiscernible]

Okay. And sir, on the renewable capacity addition target for FY '28, if you can provide some guidance over there?

See, as we have said that we have to reach 30 gigawatts by FY '30. And if we add maybe 3 gigawatts this year, so maybe approximately from the RE front, you can say maybe about 3, 3.5 gigawatts, something is a number which definitely will continue to add.

So sir, we would expect a sharp uptick in capacity addition in '29 and '30, FY '20 and FY because [indiscernible] What will happen is

Yes, yes. Beyond FY '27, it is the thermal capacity also will contribute, which is about 1,800. And also by 30, partial capacity of Salboni also commissioning is planned. So all those things put together, thermal will also be a capacity which will be added in this [indiscernible]

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

I joined the call a bit late. So to if any questions are repeated. But on Mitra, what's the reason for the increase in EBITDA this quarter on a Y-o-Y basis?

Actually, there is a one-off this quarter, like it was also be read in the Supreme Court give an order on the generation-based incentives, right? And that is increase which we will to see.

What is the number?

It is 50 as per unit is what the generation base incentive and it is in excess of INR 200 crores INR 210 crores

Yes. So this is a one-off, so this includes certain part of the company is.

Yes, that's right.

And for now going forward, which was not being given every year, we'll be getting the generation-based incentive based on this order, which was not being given earlier. That. And for the commission wind and Sara portfolio, which is almost 6 gigawatt, what would be annual steady state EBITDA.

See, you can say that almost INR 75 lakh megawatts is both you can take as the steady-state EBITDA. For the full year, capacity available.

Understood. And just to list on KSK. If I recollect [indiscernible] year, there's supposed to be a slight drop off in the tariffs -- so obviously done a fairly good amount of EBITDA, but how does that heading into FY '27 and [indiscernible]

See, we have to remember 2 things. One is that in FY '25, March, when we acquired the full year EBITDA that Plant made from the operations was around INR 2,650 crores Against that, we have made almost in excess of INR 3,300 crores this year. Of course, a lot of efficiency improvements in terms of the cost efficiencies improvement, what we have done. -- is one which will continue. Of course, there will be some impact because of the tariff reduction from UP. But a part of this will be compensated by maybe 2, 3 steps what we have taken. One is that after the acquisition of the rail and water SPV is, especially the rail one, the efficiency improvements and the cost reduction there also is going to contribute to. And second is, in terms of the fuel allocation, which we have optimized by sourcing majority of the fuel from the mine, which are closest to our plant and replacing the fuel, which was coming off from far off base to fuel logistic cost reduction is one of the main drivers, efficiency improvement during the last year. But during the year, we did lot of the steps we took in terms of operation and maintenance cost reduction. So those steps which have taken during the year will also give us full year benefit in the current year will help us to mitigate the reduction in the margins because of the UP PPA. So -- but definitely, it will continue to perform significantly better than what it was in FY [indiscernible]

If I have to add -- this is Vitae. If I have to add, we've always said that we consider a steady sales EBITDA of INR 3,700. So the idea also is that please assume that a good year is what we are highlighting and the rates for what we are highlighting. But during this following trajectory, we expect that lease June 2,700 as our base

And with the steps we are taking, we are confident that we will be delivering better than the steady-state EBITDA what Vikas just said of INR 2,700 crores, we can see

That is helpful. And just one last question. So when I look at the standard entity, the overall debt over there is almost so lot of holdco debt coming over there. And just to understand how this is panning out from the maturity from the maturity profile overall, what's the average interest rates at the [indiscernible]

Sure, the [indiscernible] level. So basically, out of this, some of them are kind of the short term, which we kind of -- because some of the acquisitions that we have done in terms of the SK rain and on -- so these are kind of -- some of them are temporary risen. So once we take over these assets, we'll kind of refinance it through the major entity or the actual entity which we do. So in terms of if you look at it from an overall perspective, I think all of them are close to what the kind of 3 years, except for about close to INR 4,500 crores, which is in the form of shortfall, the other alone.

And what will be the interest rate right now on collapse?

For the state alone, we are at about close to 8.2% is what will have. But as a loan consolidated, they're about To add to what we just said, we would like to have a project finance based financing, we see that from maturity. The maturity as long as possible for -- now also level, like we mentioned, is obviously short tenure. And for us, we overall cost of debt is about 8.3%, including working capital, right? So what we're saying is that, obviously, the short finer borrowings are there and there is obviously at a lower cost. But overall, if you look at the interest rate net it has come lower.

The next question is from the line of Mikel Megan from Bernstein.

I have 2 questions. Number 1 was any plans to set up a merchant battery energy potash cloud?

See, right now, we are in the process of executing the Battery Energy , we have signed the -- but going forward, wherever we have the solar capacity and keeping in mind how the evening peak demand shapes up, we definitely keep exploring. But immediately, in the current year, if you ask, we will be focusing on our projects under the PPA. But going forward, we will keep exploring that merchant option for especially where we have the connectivity, we have the solar plants. We are coupling the same connectivity or the evening peaks is one option which the team is working on. We keep evaluating.

Understood. But what I understand from your peers is some of them are preponing the battery plant part of a PPA to use it in the merchant and the internal the PPA starts. Would you have any such plans like that to 3, 4 year package before the solar on [indiscernible]

See, when I compare with what others are doing, see, we -- if you see that we don't have any merchant or open capacity in our solar portfolio. all is tied up, whatever is submission and what we are doing is also. And today, we see that there are curtailments happening or especially the capacities which are open, untied merchant capacities in solar are facing a very high curtailment is what we are seeing. So that is where it's a sunk cost as per me. So putting a battery using that power where which is getting curtailed, charging the battery and using the evening peak action is something maybe others may be thinking on. But I feel that this curtailment issue is a matter of 3 to 4 years. Whether for a long term, I can do the investment on the basis of this principle. Somehow doesn't fall in our scheme of things. because we look for at least a battery life of 10 years. And based on that, if the returns are protected is a better option rather than going immediately only temporarily for us. So for us, it will be lower because we don't have any open capacities in solar. So we are evaluating by setting up charging the trees by solar and evening peak once that model is financially definitely giving my weak returns, then only we'll be moving ahead

Understood. Appreciate the response. The other question I had was on the DSM regulation. In case it is implemented as part of the CRC document phase and given you have a good quantum of wind as well in your portfolio, what is the impact to [indiscernible] on your financials?

See, with this new DSM regulations, we expect a total impact, which we have budgeted in our plan is between 1.5% to 2% 1.5% to 2% of the revenues of the renewal assets Yes, It was not 0 minded. It was not 0 earlier also. It will move up to 1.5% to 2%. It used to be there today also, but now it will be slightly more.

Got it. And would it be fair to assume as that x factor in the DSM rule changes by 2030, this number goes up further?

I see the thing is now when it is known that this is going to happen -- everyone now is going to be designing the project, building the project, the tariff bidding, everything the discovery will be accordingly. So that is the. But yes, the tariffs have already been discovered, the projects being executed. Definitely, this is going to impact, but there are options and tools available to minimize this. One of the things which is being talked of is that at a particular substation, grouping all the maybe other producers who are in the same substation at a group level to see, to do the settlement rather than individually. Because someone may be at a particular moment excess, someone may be down. So it is more from the grade point of view, this is being done. Real stability. So we are absolutely certain industry has made the representation. At a group level, this will be actually not at an individual level is what we are confident of.

The next question is from the line of Abhishek Nigam from Motilal Oswal Financial.

Sir, just 2 questions. One, the [indiscernible] generation, the incentives. Is that included in other income? So that's my first question.

Yes. I think certain of it is part of revenue and sort it is so I think you can say about INR 100 crores, INR 10 crores is what is part of revenue. The other is part of the [indiscernible]

Okay. So I think the increase in other income is because of -- I mean there are some other reasons for that for that Okay. That is one. And second, on the deferred tax assets, if you can give us some clarity, I think we've seen in the past also one of the quarters and going forward also, could there be more such tax tonation

Yes. I think the deferred tax effect is primarily on account of 2 things. One is that if you see that [indiscernible] actually, we had a certain unabsorbed depreciation and business losses which were there. Now with the PPAs being signed for the entire capacity, there is visibility in terms of recoverability of these tax losses. And that is why this year, when we signed the PPA, and we said that we'll be able to kind of agonize this deferred tax. So this is a one-off. I think, mostly in both [indiscernible] the major one. The second one is in the CK. The second one is in terms of because currently with the new tax regime, the you because everybody would send a transition to go tax. The current tax would be similar to what it was like 17% to 18% because you will have to adjust 25% of the as credit available. So I think going forward, that will be the run. I think we'll be inching close to the effective tax rate of 23%, 24%, which going forward.

The next question is from the line of Saitek Jain from Ambit Capital.

The first question is on DRI commissioning we talked about 3 gigawatts this year. How much would be CTU, -- how much would be ST? And generally, are you seeing maybe faster commissioning for ST versus 2? And do you expect any changes there this year?

See whatever we are commissioning. It's a mix again of CPU and STU and also the C&I customers also under the book at. So connectivity is available for whatever we have 3 gigawatts we are planning, whether it is STU or CPU. So it doesn't make any difference whether it is ST or SP, which 1 has happened earlier. And as I said that this time as compared to the previous year, in H1, we will be seeing almost close to 50% of the capacity coming up, which means that the project is at an advanced stage, connectivity is available. So we don't see this doesn't make any difference whether it is a CPU industry, it's a mix of CTU and SPU projects. And also, as I told you, the book [indiscernible] also.

And secondly, just on the return profile for REI, I'm sorry if I missed it. What kind of curtailment you build in the projects when you bid for a project for long term? And you mentioned DSM, just clarifying, you mentioned about 2% revenue rate. Is that [indiscernible] and assuming -- is it assuming growth grouping the substation or is it without grouping at the substation?

One thing is curtailment. I will just like to bifurcate into 2. One is that a significant portion of our capacity is under group captive, which is upgrade. So I'm insulated from the curtailment on those capacities, which are almost a gigawatt of capacity, which is operational and further, we are going to add in the current year also. And the next 2 years, 3 years, we'll be continuing to add upgrade group captive capacities. So there, we are insulated from this DSM regulations. In addition to that, next question?

When you look at when you calculate. Yes. you as an when you say 2.5% of revenue rate is that when you consider 0 and assuming grouping or if this is without growth the substation?

So the cash, sorry.

What we were saying is that is the worst case scenario that is seeing considering what has been announced as of now. If there is a grouping or will be everyone benefits and we benefit out of it. At the what we see is not as 2, 2.5 what we said, it is 1.5% to 2% is what I said. And also, it is not 0 today that we don't have to make it from 0 to 1.5%. There is some which is there also. It has become a stricter now. So it is without the grouping is what I have said. After that, we expect that things can improve the grouping this will reduce.

Fair. Just one more if I can squeeze on [indiscernible] storage. You mentioned 2030 for [indiscernible] and 2031 another. Do you expect groundbreaking this year? And then what is the typical construction time line you're looking at for these PSP projects?

See, normally for pumps projects, we see that from the 0 day, maybe 36 months. And as I told maybe in my opening remark, we have got the forest Stage 1 clearance just 2 days back. and work in the non-forest area has already started. The contracts have been awarded. The electromechanical ordering has already been placed. So we are confident that, that will be in time. This will be 36 months, you can.

[Operator Instructions] We'll take the next question from the line of Mohit Pandey from Citi.

Is it possible to give any color on our merchant realizations in April and May so far?

See, as we have been saying that normally in the merchant when we sell the -- our open capacity, we normally are -- it is through bilateral contracts. -- contracts. And I can say whatever merchant tariffs are being discovered in the market, we will definitely maintain at least a minimum 20% premium, and we are continuing with that. What we have demonstrated last year also overall discovered price. We are more than 20% premium. We are continuing to sell even in the current quarter.

Okay, sir. And are there any risks to the performance of our Hydelportfolio due to possible

No, we don't see that. The reason is that if you see when the temperature increases, -- right now, when we have been seeing onset of summer and the temperature increasing, we are seeing because this now melting was slightly lower last year, but now with the [indiscernible] , the river flow is better. And with the power, what is required, even if there is -- in past also, data clearly shows that even if there is a 6%, 7%, 8% below normal monsoons, the border floor required to run at full capacity and to go as per the design energy is sufficient. So we have reviewed and we have evaluated this, and we are absolutely certain that we don't see any significant impact on our hydro operations because of this weather impact.

So just to add that there are broadly 2 is. One is, obviously, Stonelake other is rain form. So like the we take a last time, the reinform was there. This time that will be a there like we said, going to be higher. Therefore, for run of the river, it's not a concern as it's being highlighted earlier as well, and we reiterate the same.

The next question is from the line of Atul Tiwari from JPMorgan.

Yes. Sir, will it be possible to at least qualitatively share how much was of KSK's INR 90-odd crores of EBITDA was due to merchant in the quarter?

What we'll see, we will -- maybe we divide and we'll come back. The IR team will definitely get back to you and we'll give you the number.

Okay. And sir, broadly speaking, I mean, obviously, your PAT has been held by deferred tax

Sorry to interrupt you Mr. Tiwari, I would request you to kindly limit to only one question, please. There are those who are waiting for -- we'll take the next question from Rajesh Majumdar from 361 Capital.

Sir, you were talking about addition of roughly 2.5 gigawatts per annum as I understand. And if you see the pipeline for next year, FY '27, it consists of other than group captive, [indiscernible] then 3 tranches of [indiscernible] I think JV, and if I'm not mistaken, do you see any kind of delays in these projects, any of these, which can happen with the installed capacity is like falling short of our targets.

Yes. See, the thing is what you have pointed out is very, very correct. We definitely see the delay in this because we have deliberately delayed the execution and investment in these projects because the availability of the allotted connectivity is getting delayed. So we are aligning our investment and commissioning with the commissioning of the evaluation. We don't want to invest make the asset ready and then [indiscernible] that are not able to commission because of this curtailment issues and the connectivity issues. So we are particular we are insulated from any kind of penalties or anything because of the delays. So we are absolutely certain, yes.

So I mean, I missed it on probably earlier, did you reduce your earlier increase of 2.4 gigawatt per -- or you still maintain that based on these orders that we have. which is not set heavy.

Can you repeat the question?

I said the addition for this year is about 3 gigawatts, which includes a substantial amount of SEC orders. do you see any delay in this kind of addition for FY '27, which will get postponed to next year?

No, no, we don't see at all -- as I said earlier also, we are absolutely certain because the challenges for which the projects are getting -- have been getting delayed are not there in terms of connectivity, in terms of land availability, in terms of the execution -- the various stages, the projects are we are certain the current 3 gigawatt in the current year, we are absolutely certain that this will be there.

Okay. Just one follow-up question, sir.

I'm sorry to interrupt you. I'm so sorry to interrupt you. There are others. We'll take the next question from Mike from UTI Mutual Funds.

Just one question. So what is on the impact of curtailment on our EBITDA, if you can quantify that in terms of core

Yes. As I told in my opening remarks also, during the quarter, as I told you, the curtailment was not significant because a portion of the curtailment was under permanent grid networks. So my plant was available, the power was offered, but on flow. So I've been getting the further tariff for that. some portion, which was under temporary grid network as because of the delay in the connectivity pertain connectivity execution. So we have now there has been a loss of around 1 crore during the quarter and full year, approximately INR 50 crores, the impact. And it is in 2 of our assets in the state of Rajasthan. And where this evacuation capacity is getting commissioned maybe sometime in July. So we expect after this, this will not be there.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you, and over to you.

Yes. Before I close, maybe [indiscernible] upon from JPMorgan asked for what was the merchant EBITDA on Mana during the quarter, the EBITDA from the merchant sale was INR 203 crores. I just wanted to give that number. Kelly, thank you, everyone, and thanks for being with us. And maybe we hope to meet you all very soon again.

Thank you, members of the management. On behalf of PL Capital, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.