Torrent Power Limited (TORNTPOWER.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Torrent Power Limited 2Q FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Mashruwala, Executive Director and CFO. Thank you, and over to you, sir.

Thank you, sir. Thank you. Good evening to all of you, and thank you for joining Torrent Power's earnings call for Q2 FY '26. First, I will take you through the performance of the quarter, after which phone lines will be open for a Q&A session. We'll explain the performance of the company at PBT level first, and then we'll take you through the tax expenses separately. Reported PBT for the quarter stood at INR 979 crores as compared to INR 689 crores in the corresponding quarter of last year. It's an increase of about INR 290 crores, which is about 42% on a reported basis. PBT for the current quarter includes nonrecurring credit of INR 31 crores on account of the receipt of favorable orders in license distribution business, which mainly includes the carrying cost allowances. PBT for the corresponding quarter of last year includes nonrecurring credit of about INR 67 crores on account of 2 factors. First, accounting of INR 99 crores on receipt of favorable orders in license distribution area, which mainly includes the carrying cost allowances, partly offset by lower generation from the wind power plant on account of forced stoppages of wind turbines due to heavy rains and Asna cyclone witnessed in Gujarat in the quarter, leading to a reduced contribution of INR 32 crores. Adjusted for these one-off items, PBT for the quarter stood at INR 948 crores as compared to INR 622 crores in the corresponding quarter of last year and an increase of about INR 326 crores, which is about 52%. Business-wise sectors contributed to the performance are as follows: First, contribution from thermal generation business increased by about INR 293 crores, mainly on account of better contribution from the sale of merchant power as well as LNG by about INR 304 crores. Second, merchant gain were partially offset by the higher O&M expenses as well as noncash adjustment on account of foreign exchange variation of about INR 11 crores. Second, contribution under the distribution business adjusted for one-off items increased by about INR 11 crores, mainly on account of first, improvement in T&D losses of distribution franchise units, partially offset by higher T&E in licensed distribution area. Second, additionally, contribution for the licensed distribution business was supported by the increase in ROE and ROCE on account of capitalization of assets and higher rate of return on equity as per the new tariff regulations. And third, demand growth in our distribution business were in the range of about 4% to 5%. The third item is contribution from renewable generation adjusted for one-off items reduced by INR 20 crores, mainly on account of lower PLF from the existing wind power plant into lower wind resources, partially offset by the contribution made by newly commissioned solar capacity of 381 megawatt. Balance division of INR 43 crores is mainly on account of, first, reduction in finance costs on back of repayment made in Q4 of FY '25, partially offset by increase in depreciation and other miscellaneous expenses. This completes the explanation of the financial performance during the quarter. Moving on to the project update. First, during the quarter, in addition to our existing renewable pipeline, subsidiary of the company received LOA of 250 megawatts of FDRE renewable generation from our licensed distribution unit. The company secured Letter of Award from MP Power Management Company Limited for long-term supply of power from newly -- for new 1.6 gigawatt coal-based power plant at a tariff of INR 5.83 per kilowatt hours. India's largest green hydrogen natural gas blending initiative within the City Gas Distribution sector was successfully commissioned during the quarter. Progressive commission of 367 megawatt MSEDCL project, aggregate installed generation capacity of the company stood at about close to 5 gigawatt as on 30th September 2025, comprising of 2.7 gigawatt gas capacity, about 1.9 gigawatt of renewable capacity, and 362 megawatt of coal-based capacity. Pipeline project at the end of the quarter includes 3.6 gigawatt renewable capacity, 3 gigawatt of pumped storage capacity, 1.6 gigawatt of coal plant and 2 transmission projects at Khavda and Solapur. Further details of the pipeline project have been summarized in our latest investor presentation available on our website. That's all for the quarter. Now I would request coordinator to open the line for Q&A session. We wish everybody to stay safe and healthy. Thank you so much. Handing over to the operators.

[Operator Instructions] Our first question comes from the line of Mohit Kumar from ICICI Securities.

My first question is, sir, of course, this quarter, we have shown a robust performance. Does it -- I think a part of it comes from the merchant sales under the short-term power purchase agreement, which is signed in the month of March. Are we still selling in the third quarter some part of it under this agreement or this agreement is over now?

So we have supplied majority of the portion in the Q2. So that we can say majority portion is supplied under the contract in the Q2.

Understood. So there's hardly anything left for the Q3, right?

Yes, maybe some portion, not material, I would say.

Understood. Is it possible to provide us the breakup between merchant sales and LNG sales during the quarter, some broad indicator -- indication?

LNG sales is not material, I would say. Most of the revenue contribution is coming from the merchant sales.

Understood, sir. My last question is on this coal-based power plant, which you have won in this quarter. The capital cost seems to be on slightly higher side. Is it the maximum thing? Or do you think you'll be able to do it at a much lower cost, maybe closer to INR 11 crores, INR 12 crores per megawatt rater than INR 13 crore per megawatt. Is it a possibility? And the related question is what is the fixed cost, fixed tariff, which you have bid for this part power plant? Is it possible to give a breakup between the variable and fixed cost quoted in the bid?

So no, this kind of a rate is going on, in fact, now cost of equipment has gone up basically. So this is what the cost we have budgeted as of now. So it will -- once we -- so it's basically this kind of a cost is going on. And in terms of your second question on the variable cost and fixed cost, fixed cost is about INR 4.22 and variable cost is pass-through. That is what the configuration of the PPA, I would say, LOA.

Our next question comes from the line of Sumit Kishore from Axis Capital.

You mentioned that you have taken a 500-megawatt FDRE project from TPL-D. What are the terms of this? How much is solar, wind? Are there any other specifications that you can disclose to us?

It's a combination of solar, wind and the battery. So about -- solar will be about 350, wind will be about 150 megawatts and tariff is about 4.87 is the tariff.

Okay. Wind is 150?

Yes, sorry?

Wind is 150, you said?

Yes, yes. Wind is 150, solar is about 350 megawatts.

And how much battery?

Battery would be another 100 megawatt kind of batteries would be there.

100 megawatt with 4 hour storage or...

So it's 450 megawatt hour.

4.5 hours storage?

Yes. So 112 megawatts of battery is equivalent to 450 megawatt hours.

Okay. 4 hours. My second question is your presentation mentioned that BTG has been awarded for the coal plant. Who has it been awarded to and at what project, at what value?

We're not able to share it, but the project, there's a turbine contract is awarded.

So TG is awarded, boiler is not yet awarded?

No, no, BTG entire thing is awarded.

Yes, BTG and balance of plant is under discussion, BTG is awarded.

So is it awarded to 1 of the 2 domestic players?

Yes, 1 of the 2 domestic players, you can say.

Okay. The next question is what is the CapEx in first half of the fiscal? And you had mentioned last time that a significant portion of the CapEx that you plan to incur for RE, almost INR 8,000 crores will be incurred in this year. So what is the progress on RE CapEx specifically also?

So H1 number is license, we have incurred about close to INR 780 crores. Franchisee, INR 100 crores kind of a thing. Transmission, we have incurred about INR 275 crores. And RE, renewable CapEx will be INR 2,500 crores we have incurred in the H1.

INR 2,500 crores we have incurred in H1, RE?

Yes, RE.

What is the overall H1 CapEx that you have incurred, consolidated level?

Close to INR 2,700 crores.

INR 3,700 crores.

INR 3,700 crores.

Okay. So INR 3,700 crores total, INR 2,500 crores is RE. Okay. Got it.

Yes, exactly.

And finally, in your opening remarks, you mentioned this, I'm not sure whether I got the number. The total increase in merchant contribution for thermal was INR 324 crores, you said?

INR 300 crores, roughly.

INR 300 crores?

Yes.