Torrent Power Limited (TORNTPOWER) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Torrent 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 Mr. Saurabh Mashruwala, Executive Director and CFO. Thank you, and over to you, sir.

Good evening to all of you, and thank you for joining Torrent Power Q1 FY '27. We'll first [indiscernible] performance of the quarter. [indiscernible] the question and answer. [indiscernible] the performance of the company at [indiscernible] and then we'll take you through the tax expenses separately. Reported PBT for the quarter stood at INR 925 crores as compared to INR 985 crores in the corresponding quarter of last year, a reduction of INR 60 crores. for the corresponding quarter of last year included a nonrecurring loss of INR 69 crores on account of one case adjustment due to foreign currency situations. As one-off, PBT for the quarter stood at INR 925 crores as compared to INR 1,044 crores the comparable quarter of last year, a reduction of INR 119 crores [indiscernible]. Tax expenses during the quarter has increased by 28% as compared to [indiscernible] for the corresponding quarter of the last year. The increase is mainly on account of completion of tax [indiscernible] for some of the units. This is a [indiscernible] with the performance are as follows: first, Contribution for the thermal generation business remains resilient despite elevated gas price arising from ongoing geopolitical tension in Middle East an increase in O&M expenses. And this nonrecurring item in the corresponding quarter of the previous year, the business proforma was lower by INR 123 crores, primarily on account of 3 factors. Despite [indiscernible] during the quarter, the company maintained healthy operating margin [indiscernible] power operations. However, the gains from the merchant sales in LNG were lower by INR 87 crores. During the quarter, we have undertaken upgrade exercise to our gas-based plan to improve the plant flexibility and availability, resulting in the increase in O&M expenses by INR 51 crores. Benefit of these are being demonstrated during the quarter, whereby we were able to realize better margins on merchants ourselves. While some of the upgrades are implemented, others are being progressively rolled out in our gas base unit, which will help us improve our margin realization going forward. This will also help us manage the evolving operating environment which have significantly changed recently on back of increased renewable and energy penetration, requiring our needs to affect more frequently as cyclical mode, respond to varying demand returns. These measures are expected to support higher agility, improve operational reliability and optimization of long-term and cost as well as despite the increase as well as despite the increasing [indiscernible] revenue. Company on June '26, consummated acquisition of [indiscernible] Power Plant, which contributed INR 15 crores in the quarter. [indiscernible] generation was partly offset by increasing gains from distribution and real segments. The second reason on the distribution and transmission segment. In total, is contributes 71% additional profit, driven by 3 factors: first, these top favorable orders from the regular drug couple we carrying costs of INR 41 crores. This is a normal course of business due to regulatory assets we have, and we are getting the favorable regulatory orders. Second, improved contribution terms of operation by INR 19 crores, supported by two factors for increasing ROE and ROE on account of capitalization of assets and higher rate of heaters on equity as per the new tariff regulations and other incentives. The [indiscernible] second is improved contribution from the distribution franchisee business on back of improved volumes, it had increased tariff. Volume across the financial distribution business improved [indiscernible]; the third reason is additionally, new commission transmission project has contributed INR 11 crores in clinical profit. Now coming to the renewable operation. We here operations contact positive contributions. We do generation from newly commissioned capacity and improved PLF across the main and solar was partially offset by gain in similar quarter in similar quarter of the previous year on account of LCS income on daily repayments. The fourth reason is other factors lowering the probably INR 90 crores. There are two main reasons: first, increase in the finance cost on [indiscernible] of higher capitalization and retail borrowing second, increase in [indiscernible] and depreciation, which was on account of higher capitalization, mainly relieve segments. This completes the explanation of the financial performance within the quarter. Coming to the update of the videos closet and the implementations. Renewable energy project of 70-megawatt got commissioned during the quarter, taking the aggregate installed capacity installed generation capacity of the company to 6.6 gigawatts as on 30 June '26, comprising of 2.7 odd [indiscernible] 2.1 giga delivery capacities. First on renewal analyst projects as on 30 June '26, [indiscernible] 4.6 gigawatts and under implementation which we expect to commission progressively as under about 1.2 gigawatt capacity is expected to commission in current year FY '27 between 1.4 to 1.6 giga capacities expected to comment next year if you see FY '28 and balance capacity in FY '21. 1,550 crores was incurred during the quarter against INR 1,200 CapEx in Q4 FY '26 and INR 355 crores of CapEx in Q1 of FY '26 compared with what was the last year. Of the total CapEx of INR 29,600 crores in RE projects and the implementation, cumulative cases of INR 8,800 crores that we incur up to 30 June '26. In FY '27, total CapEx of approximately INR 10,000 crores expect to be incurred for all RE projects. Moving on to the implemention under the [indiscernible] thermal project of INR 1.6 giga [indiscernible]. Fourth, activity are underway, wherein following major milestones have achieved. First, our power agreement executive with the MP power management company in media. Second, [indiscernible] issued with the BTG as well as [indiscernible] the project. The fourth, the projected [indiscernible] in the next 6 to 7 years, a total CapEx of INR 450 crores has been incurred on. Coming on the Palm Solar Hydro [indiscernible] underway very following major milestone heavy force and the storage facility agreement with MSC was executive. The nature of our issued with the civil hydromechanical and [indiscernible]. Second, electrical and mechanical stages. Environment and foreign clearance has been received for the project. The project is expected to come into the next 3 to 4 years, and total ex of INR 1,030 crores has been incurred to 30 June 2026 is a transmission project. [indiscernible] under our implementation expected to be commissioned this year. Cumulative capital of INR 330 crores as a as on 30 June 2026. Further details on the pipeline to tease been summarizing our as investor possession available on our website. That's all for the quarters. Now I request order to open line for Q&A sessions. Stay safe and healthy. Thank you so much, handing over to the operator.

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

Good evening, sir, and thanks for the opportunity. My question is on [indiscernible] Power. Can you help us with the revenue adjusted EBITDA par for Q1 and gross state on the point or post the acquisition of [ Nava ]?

So the Q1, we acquired on the 25th of June, there is hardly 5 days of income we have booked, not for the entire quarter. So 5 days, I would say, EBITDA was about total there is overall 15 plus profit we have booked in the in our results, not material MRD because it's a 5-year offer we have consolidated [indiscernible] book of accounts. As far as gross debt is concerned, so it is around INR 6,000 crores -- INR 6,500 crores of gross debt, which is added in the books because of the Nava project. INR 3,000 crores in the [indiscernible] about INR 3,800 crores in current power books.

Understood. And is it fair to expect that now part 250 crore EBITDA per quarter going forward?

So on a -- yes, you are right. So on a [indiscernible] basis, around INR 1,000 crores of EBITDA should be a good enough number.

Yes, exactly.

Understood. My second question is.

[indiscernible]

I understand, sir.

Not on the reported [indiscernible] reported [indiscernible].

Understood. Yes, that is the second question, sir, can you help us with the reason for lower contribution to EBITDA renewables in this quarter despite 30% increase in generation, I'm talking about EBITDA issues, which was reported in this segmental I see only INR 40 crores incremental.

So different, you can see this number. But if you look at recollect that the last similar quarter, we have come about INR 47 crores of the LCS claim was available, which was not available in the current quarter. That is why you are seeing the defense will go up. Otherwise, [indiscernible] is higher as far as EPA is concerned.

Just on the RE side, right? Understood, sir. My last question here, of course, I think you spoke about your capital expenditure for gas for 50, INR 10,000 crores. But how much you incurred in Q1?

Q1, we have total incurred -- so around INR 1,500 crores but in Q1 for renewable projects. [indiscernible]

We haven't spent anything on the call, nothing on the PSC in the Q1. That right, sir?

Therma;, basically [indiscernible] we incur about INR 125 crores.

The next question comes from the line of Satyadeep Jain with AMBIT Capital.

First I wanted to understand yet the demand across different distribution site. While end of our you resisted 10% volume growth Y-o-Y, the [indiscernible], all these other licenses and all had very muted growth. Just trying to understand what was happening in these regions when overall at the all-India level we had very strong growth in the quarter. And the AT&C losses also increased in all these almost all will increase substantially, both demand [indiscernible].

So if you unearth benchmark, I would say 10% is the growth, which is comparable with the country's average, I would say. So the industrial town always growth will be not comparable with the overall demand growth, I would say. [indiscernible] is also an industrial area delivery. So it's comparable to the pure growth. E&S DD, there is some lower demand is exceptionally as I would say, it's not a repetitive kind of a nature. In terms of ATSC loss, I would say, Nagra, particularly the last year single-quarter we have -- we got some good realization some of our agreemented but pasting which has reduced our C substantially, which is not the case in the current quarter. So that is what difference, I would say, in August. Otherwise, SMB is not materially different, I would as comps last time there is a substantial decel in Agra, mainly because of the higher realizations we have received in the comparable part of last year. which is not the [indiscernible] in the term quarter.

Okay. And sir, what was the -- I'm not sure if I missed it in the opening remarks, what was the merchant EBITDA and inventory EBITDA in this quarter.

The differential lower profit is about INR 87 crores, what we have said. We sold about 445 menus in the merchant market in the current quarter.

And this was largely in Haidamarki?

Yes. Yes. Yes.

Okay. Just trying to understand how do you look at this market given you have a large entire capacity in many players are adding battery and given the merchant best installations that we see for this year and projections, do you see a case for any risk? How do you evaluate merchant gas potential for you?

Look at the demand pattern in the country where the big demand and the summer demand will always be there. And now the demand figure is also prolonging, I would say. So in the in time in the summer time, we keep on getting this opportunity in the merchant market for our metal capacity and sidecar, I would say. So when the gas price thing becomes normal, we will keep on getting more opportunities going forward, I would say.

Sir, lastly, on some -- there is some delay in 1 FDR project, it seems and some other projects also like, I know you're talking about 1.2 gigawatts in general this year. But are you seeing any delays on the -- these are all -- some of these are your own discounts seems like STU. Are you seeing some delays in St commissioning and the latest estimate you have a 1.2-gigawatt. What kind of visibility do you have for transmission availability?

As you're aware that the all project connectivity, real transit line availability basically. [indiscernible] transition and onward [indiscernible] and some of the local the ROW issues, which we are trying to work with the transmission related to ensure fee that they should come there to different time that whoever project progress should also align with their time line. And [indiscernible] what we have said is after factoring in all those issues. So our expectation is that we should achieve this target, what we have given. Now if something unfortunate happens, we'll update you on a quarterly basis. but this is what we feel that is a reasonable estimate right now, looking at the current scenario.

[Operator Instructions] Your next question comes from the line of Sumit Kishore with Axis Capital.

My first question is in relation to your 1.2 gigawatt commissioning target. What kind of payout are you expecting of project commissioning of the 70 megawatts in 1 is expected to be more Q3, Q4 heavy? Or is there any paydown that we should be mindful of?

So we expect about [indiscernible] first quarter of commissioning was 70 megawatts. But by Q2, we expect about 400-megawatt will get commissioned and the balance will happen in H2 is. That is what like that is what we are progressing.

Okay. So [indiscernible] will be a 600 megawatts in H1 is current?

Yes, exactly.

Okay. And we were leading in the media that you Amgen plant is supposed to be sort of shifted to another location and in due that set up of 800-megawatt replacement power plant, is there -- what is the official -- what is your version what has happened so far.

So [indiscernible] power project is about 62-megawatt capacity. And it is -- we have a permission to ramp up to December. And what has happened since after December 30, it's not going to be in operation. we have expected and it's basically plant available for dump-down distribution. So we will request the state government for the core double the pool allocation of CFS of 662 megawatts. The total state government has approved the coal allocation. But we have requested the central government for the full reuse once the central government puts the core location for this plant, we plan to set up about close to about 80-megawatt need to replace the engine part of it. That is what the plan is.

So has the land for this plant earmarked or allocated to you?