| Q3 FY26 Earnings Conference Call
Summary : Adani Power reports resilient Q3 FY26 performance despite weaker demand, driven by strategic PPA tie-ups and significant capacity expansion plans.
Management Perspective positive : Our operations remain resilient due to our fuel logistics cost advantages, long-term tie-ups and competitive merit order position.Despite lower revenue, profitability remained strong.Our balance sheet is strong, liquidity is excellent, and we are well positioned to fund growth. We remain confident in the long-term power demand outlook for India.We are very much confident that in the planned way, we will add our capacity and also, we will move from 18.15 gigawatt capacity to 42 gigawatt capacity by '31 and '32.
Concall Report Analysis & Insights
Business Overview
- Q3 FY26 power demand was weaker, marginally lower at 392 billion units.
- Higher renewable generation impacted thermal demand and merchant prices.
- Installed capacity is 18.15 GW; Q3 power sales were 23.6 billion units, slightly up.
- Q3 FY26 revenue was INR 12,717 crores, lower due to reduced selling rates and coal prices.
- Q3 FY26 EBITDA was INR 4,636 crores; PAT was INR 2,488 crores, lower year-on-year due to prior period income.
- Total debt was INR 45,331 crores; net debt INR 38,679 crores, increased for capex.
Future Growth Prospects
- Received Letter of Award for a 3,200 MW project in Assam under DBFOO model.
- Progressing on 23.7 GW thermal expansion; Mahan Phase-II 80% complete, Korba Phase 2 resumed.
- Expect strong power demand and good bilateral PPA demand in the coming year.
- Plan to expand capacity by 23.8 GW, totaling 42 GW by FY31-32.
- New PPAs will generate EBITDA from plant availability, with pass-through fuel charges.
Management Insights
- Operations remain resilient due to fuel logistics advantages and long-term tie-ups.
- Profitability remained strong despite lower revenue, aided by cost control.
- Strong liquidity maintained with timely payments from all customers, including Bangladesh.
- 90% of operating capacity is tied up under PPAs, providing strong revenue visibility.
- Confident in completing all projects on schedule and funding growth from internal accruals.
Signs of Skepticism
- CEO absence due to unspecified business exigency.
- Rajasthan regulator's non-approval of 3,200 MW PPA raises uncertainty.
- Decline in Q3 FY26 PAT compared to prior year due to one-time income difference.
- Mention of 'some sort of issues' in Bangladesh, despite regular supply claims.
Risk Factors
- Weaker power demand and higher renewable generation impacted thermal demand.
- Lower merchant market prices and power selling rates reduced revenue.
- Rajasthan regulator did not approve 3,200 MW PPA due to resource adequacy concerns.
- Uttarakhand PPA bids are taking longer to be submitted.
- Geopolitical issues in Bangladesh, though supply and payments are regular.
Good To Know
- Acquired Vidarbha plant in July 2025, now fully operational with a 5-year PPA.
- Raised INR 7,500 crores through AA-rated non-convertible debentures.
- Godda power plant supplies 10% of Bangladesh's total effective capacity.
- India's policy allows export of electricity from coal plants using imported or e-auction coal.
- Unsecured perpetual securities have been fully extinguished, with no outstanding balance.
Key Drivers
- New 3,200 MW Assam project.
- 23.8 GW capacity expansion by FY32.
- 90% capacity tied to long-term PPAs.
- Strong internal accruals for capex.
Key Analyst Discussions
Competitive Environment
- Weaker power demand and higher renewable generation impacted thermal demand.
- Average market clearing price in day-ahead market declined year-on-year.
- Company focuses on long-term PPAs to moderate exposure to rate volatility.
- New PPAs have higher capacity charges than legacy PPAs.
- Expect better merchant prices in the coming year.
Market Trends & Consumer Behavior
- All India power demand was marginally lower in Q3 FY26.
- Extended monsoons and cooler temperatures reduced power demand.
- Renewable energy contribution increased to 24% from 20%.
- Peak demand expected to increase to 380-400 GW by FY32.
- Demand for December and January increased year-on-year.
Financial Highlights
- Q3 FY26 revenue was INR 12,717 crores, down from INR 13,434 crores last year.
- Q3 FY26 EBITDA was INR 4,636 crores, slightly lower than INR 4,786 crores.
- 9-month capex incurred was approximately INR 15,000 crores.
- Average cost of borrowing is less than 9% this year.
- Employee cost includes a one-time INR 56 crore charge for new labor codes.
Product Composition
- Installed capacity is 18.15 GW, with 90% tied up in PPAs.
- Open capacity is 10%, with a strategy to reduce it to 3-4%.
- Upcoming capacity additions will be 100% PPA-backed.
- New plants will act as balancing power plants for grid stability.
Strategic Considerations
- Assam PPA for 3,200 MW at INR 6.30/kWh total charge.
- Karnataka PPA for 570.5 MW at INR 5.78/unit.
- Korba Phase-II, Mahan Phase 2, Raipur Phase 2, Raigarh Phase 2 commissioning from FY27.
- Assam greenfield project capex estimated at INR 10 crores per megawatt.
- Funding capex primarily from internal accruals and domestic capital markets.