Adani Power Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Volume-led growth, softer realizations: Power sales volume rose 19% YoY in Q4 and 20.7% for the full year, but merchant realizations dropped to INR5.03/unit from INR6.17, pulling Q4 continuing EBITDA slightly lower.
• Balance sheet is the moat: Net debt to EBITDA sits at 1.4-1.5x, and internal accruals alone can fund the entire INR120,000+ crore capex plan over six years, a capability management calls unmatched in the country.
• Capacity build-out is locked in: Advance orders placed for 11.2 GW of ultra-supercritical equipment, and brownfield projects at Mahan, Raipur and Raigarh are in full swing toward a 30,670 MW target by 2030.
• Coal integration deepens: Four captive mine wins with 14 MTPA peak capacity will slash fuel logistics costs, with the Dhirauli block starting production this year and savings of 50-100% of coal cost on transportation alone.
• What to watch next quarter: The pace of PPA signings from the 14 GW bid pipeline, the trajectory of merchant rates through the summer, and closure of the Vidarbha Industries acquisition.

Volume & Realization Dynamics

• Sales volume surge: Power sale volume hit 9,590 crore units for FY25, up 20.7%, driven by strong all-India demand growth of 4.2% and the integration of 2,300 MW of acquired capacity during the year.
• Merchant price compression: Merchant realization fell to INR5.03 per unit in Q4 FY25 from INR6.17 a year ago, and to INR5.93 for the full year from INR6.92, reflecting the demand slowdown earlier in the fiscal year.
• Demand inflection in March: All-India power demand growth accelerated to 6.6% in March over March '24, and merchant rates have risen sharply since, setting up what management expects to be a year of good rates and good demand.
• Merchant strategy is not pure spot: The company ties up most merchant capacity through bilateral contracts ranging from one month to one year ahead, rather than relying entirely on the day-ahead market.

S B Khyalia: "If we see from March '25 onwards, the outlook of demand is quite positive, and the rates from March onwards have also gone quite high. So, we expect that throughout the year, we should be having good rates and good demand. The economy is growing and there is very less capacity likely to get commissioned during the year, particularly on the thermal side. So, we hope to have good rates this year."

Capacity Expansion & Execution

• 30,670 MW by 2030: Three brownfield projects of 1,600 MW each at Mahan, Raipur and Raigarh are under active construction, alongside the revival of the 1,320 MW Korba expansion in Chhattisgarh.
• Supply chain secured ahead of competition: Advance orders for 11.2 GW of ultra-supercritical boilers, turbines and generators have been placed, with a package-based contract model designed to shorten execution timelines and lock in vendor commitments.
• Commissioning cadence: Mahan's 1,600 MW is expected in March or April 2027, after which one 800 MW unit will be commissioned approximately every six months. Lanco Amarkantak's two units are likely by end of this year or first half of next year.
• Vidarbha Industries near close: The committee of creditors has approved the resolution plan for the 600 MW Butibori plant, and once the NCLT order is pronounced, VIPL will be added as a commissioned asset, taking installed capacity to 18,150 MW.

Fuel Security & Coal Integration

• Four captive mine wins: Three blocks in Madhya Pradesh near Singrauli and one in Maharashtra, with combined peak capacity of 14 MTPA, enough to fuel roughly 3,000 MW of generation.
• Transportation cost advantage: Mining costs are comparable to Coal India, but transportation adds 50% to 100% to the delivered coal cost at most plants, and that entire logistics burden becomes savings when captive coal is used at the nearest plant.
• Merchant capacity is the primary beneficiary: Coal from the Maharashtra mine will feed the nearest Maharashtra plant, while the three MP mines will serve the Mahan Power Plant, whose Phase 1 and upcoming Phase 3 are not yet tied under any PPA.
• Dhirauli first to produce: The Dhirauli block in Singrauli will begin coal production this year, marking the company's entry into commercial coal mining for captive use.

S B Khyalia: "In most of the power plants almost 50% to 100% of the coal cost gets added in the form of transportation cost, and that would be almost entirely our savings."

PPA Pipeline & Offtake Visibility

• 14 GW of bids in progress: The company is participating in various long-term thermal PPA bids from state DISCOMs, with more than 14 GW at various stages and over 10 GW of additional bids expected to be launched soon.
• MSEDCL PPA signed: A PPA for 1,496 MW with Maharashtra State Electricity Distribution Company has been signed, with MERC adopting the discovered tariff in its September 2024 order.
• Coal allocation de-risks fuel: 24 GW of coal has been allocated to various states for inviting bids under SHAKTI policy clause B(iv), which mitigates fuel risk for upcoming plants tied under those PPAs.
• Management confident on full PPA coverage: The stated view is that states will need much more capacity than Adani Power's planned additions, and the company is hopeful the entire capacity will get signed through PPAs.

Financial Position & Capital Allocation

• Continuing EBITDA growth: Full-year continuing EBITDA rose 14.8% to INR21,575 crores, driven by higher revenue and lower fuel prices, though Q4 dipped slightly to INR5,098 crores from INR5,273 crores on lower one-time prior-period income.
• Depreciation and tax drag: Depreciation rose to INR4,309 crores from INR3,931 crores on newly acquired assets, and tax expense swung to INR3,610 crores from a INR37 crore credit in FY24, primarily on deferred tax.
• Bangladesh receivables improving: Outstanding has declined by around INR500 crores in the last quarter, with payments now exceeding monthly billing, so full power supply continues uninterrupted.
• Capex fully funded internally: FY26 expansion capex is planned at INR13,307 crores, and with EBITDA expected above INR21,000 crores this year, internal accruals are sufficient to meet the requirement without additional borrowing.
• Dividend decision deferred: The board will consider dividends when returns from incremental cash flow investment fall below the marginal rate of return investors seek, a threshold not yet reached given the capex opportunity.

Anupam Misra: "There's no other company in the country which has the ability to construct assets without having financing, and therefore, that's the reason why we've been able to put in orders for 11.2 GW of coal-fired power projects."

Guidance & Commitments

Key Metrics