Adani Power Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Volume growth offset by soft tariffs: Power sale volumes rose 7%+ YoY to 2,370 crore units, but an unusually prolonged monsoon pushed PLF down to 62.8% and merchant realizations fell ~10% YoY to ₹5.37/unit, keeping EBITDA nearly flat.
• PPA de-risking accelerated: The PPA-tied portfolio moved from ~88% to ~91%, with 2,400 MW (Bihar), 1,600 MW (MP), 570 MW (Karnataka) and 500 MW (Maharashtra) signed this quarter, insulating future earnings from merchant volatility.
• The build-out is fully underway: Four projects totaling 6,120 MW are under construction with 100% advance equipment ordering; management expects ~3 GW of new capacity to commission next year, kicking off the next earnings cycle.
• Godda gets an Indian grid option: Grid connection approval received, with connection expected by December 2025, creating a backstop if Bangladesh scheduling or payment falters.
• What to watch next quarter: The pace of PPA finalization from the 17 GW bid pipeline, the trajectory of merchant realizations as weather normalizes, and any change-in-law orders from states on coal GST/cess.

Volume & Realization: The Quarter's Tug-of-War

• Monsoon hit PLF hard: An unprecedented early onset and delayed retreat of the monsoon suppressed power demand and peak demand, dragging PLF to 62.8% in Q2 FY26 from 66.9% a year ago and subduing merchant tariffs.
• Volume growth held the top line: Total continuing revenue edged up slightly to ₹13,679 crores despite tariff weakness, because competitive PPAs, low-cost merchant plants and newly acquired capacity pushed sale volumes 7% higher.
• Merchant realization dropped sharply: Average merchant realization fell from ₹5.88 to ₹5.37 per unit YoY, a decline of roughly 50 paisa; management expects this to recover to around ₹6 for the balance of the year.
• PPA realization is locked in: Long-term PPA rates averaged ₹5.70 per unit and are not expected to change; only offtake volumes are exposed to demand swings.
• Fuel costs rose on new plants: Fuel expenses grew 2.4% in Q2 FY26 due to higher volume and the full-period operation of recently acquired plants, though H1 FY26 fuel cost actually declined 2.8%.
• Other expenses jumped 24%: The increase was driven primarily by full-period operation of acquired plants and additional maintenance expenditure from scheduled overhauls.

Khyalia: "We have revived the operations of 600 MW Butibori plant of Vidarbha Industries Power Ltd., which was acquired in July 2025, within just two months. This plant had been shut down for almost 10 years."

PPA Portfolio: De-Risking at Speed

• PPA coverage moved to ~91%: The portfolio shifted from ~88% to ~91% tied up under long-term or medium-term PPAs, including a 5-year Maharashtra PPA at ₹5.55/unit and a Karnataka LOI at ₹5.78/unit.
• Major state wins this quarter: Awarded 2,400 MW PPA in Bihar, 1,600 MW in Madhya Pradesh, 570 MW long-term (25-year) PPA from Karnataka supplied from existing Raipur capacity, and a 500 MW PPA for the revived Butibori plant with Maharashtra DISCOMs.
• Assam bid at final stage: Bids concluded for 3.2 GW with Adani Power as the L1 party; commission approval has been received and positive communication is expected shortly.
• 17 GW bid pipeline in play: States include Rajasthan (3,200 MW), Uttarakhand (1,320 MW), Maharashtra (1,600 MW), Uttar Pradesh (4,000 MW), and West Bengal (2,260 MW), totaling 12,000 MW, plus other bids; the Rajasthan bid submission date is next month and Uttarakhand documents are under regulatory approval.
• Intent to tie up more open capacity: Management stated it intends to tie up further open capacity under PPAs, similar to the recent ~1 GW of awards, to reduce volatility impact.

Capacity Expansion: The 18 GW to 42 GW Roadmap

• Four projects under construction (6,120 MW): These will be completed in stages between FY 2026-27 and FY 2028-29, with 100% advance ordering for boilers, turbines and generators already placed.
• Commissioning cadence laid out: ~3 GW next year, then 2.4 GW, then 3.2 GW, and in FY29-30, 7.2 GW; management stated more than the originally planned 12 GW will be commissioned, with some capacity from the second 12 GW stage also arriving before FY29-30.
• Project de-risking is structural: All four projects are largely brownfield with 100% land availability; most environmental clearances are granted or in an advanced stage of approval; in-house project management capabilities are expected to deliver on time with capital cost leadership.
• Equipment deliveries are ahead of schedule: Management expressed confidence deliveries will be received per agreed timelines (38 to 75 months staggered), noted the four projects under construction are ahead of time in both delivery and execution, and stated there is no likelihood of any cost overrun.
• Equipment order split partially disclosed: 8 machines of 800 MW were ordered from L&T, with the balance going to BHEL; management declined to provide a precise split or discuss equipment pricing, calling it confidential and inappropriate to disclose in a competitive market.
• Dhirauli mine to begin coal production next year: The mine has been commissioned and box cutting is expected to be completed by end of this year; it is located very close to the Mahan plant where one unit is already operating and two more phases are coming.

Khyalia: "We are set firmly on our path to raise our generation capacity from 18 GW to 42 GW by 2032, with an even faster growth in earnings and cash flows."

Godda: The Indian Grid Option

• Grid connection approved: Approval has been received to connect the Godda Power Plant to the Indian grid, with connection expected by December 2025.
• Two conditions unlock Indian sales: Under regulations, Godda can sell power in the Indian grid if there is persistent no scheduling from Bangladesh (no demand) or if there is a payment default under the PPA; management framed the grid connection as a backstop, not a pivot.
• Godda PLF remains resilient: PLF was 72% at the end of Q2, nearly unchanged from 73% last year; management noted this is much better than the Indian grid where most thermal projects run at 60%-65%.

Khyalia: "Otherwise, why should we be interested to selling in the Indian grid? So it is basically going to address the issue, if because of any reason, power is not being scheduled or because we are not getting the payment, both the conditions will get addressed."

Acquired Plants & Financial Position

• Acquired plants contributed meaningfully: Mahan delivered revenue of ₹1,049 cr and EBITDA of ₹521 cr; Tuticorin delivered revenue of ₹677 cr and EBITDA of ₹54 cr; Korba delivered revenue of ₹339 cr and EBITDA of ₹84 cr, all in Q2.
• Debt rose on bridge financing: Total debt increased to ₹47,254 crores from ₹38,335 crores at March 2025, mainly due to bridge financing for capex and working capital needs supporting growth plans; net debt remained steady and healthy at ₹36,776 crores.
• Capex funding mix defined: A significant portion of capex will come from internal accruals; the interim bridge requirement over the next 2-3 years will be taken from the market in a mix of short-term and long-term instruments from the domestic capital market or domestic banks.
• Finance costs and depreciation controlled: Finance costs were maintained despite the growing scale of operations and ongoing expansion; depreciation increased in line with the acquisition of power plants over the last year.
• Tax charge higher on deferred tax: A higher deferred tax led to a higher tax charge for Q2 and H1 FY26 versus the corresponding periods last year.

Regulatory & Policy: Coal Cess and State Dynamics

• Compensation cess impact is neutral to the company: The change in compensation cess is driven by the GST Act, not state incentives; in most of the domestic market the impact is positive, but since change in law is to be passed on to the customer, it is hardly anything to the company.
• CERC has initiated a suo motu petition: Some states have already issued change-in-law notices for the coal GST/cess change, some may issue them in due course; CERC has initiated a suo motu petition to pass an order, though no specific timeline was given for when all states will act.
• States weigh siting trade-offs: States evaluate positives (saving transportation cost versus paying transmission charges and losses; GST revenue on CAPEX and OPEX since GST is consumption-based; employment generation; ancillary industries) against negatives (coal-bearing states ask for some power at variable cost, e.g., Chhattisgarh 5%, Odisha similar).
• Thermal remains the baseload answer: Battery backup tenders so far are for token quantum and not meeting baseload requirement; the Government of India's projection of batteries up to 2030 is a fraction of total demand; states have already considered battery installation in their resource adequacy studies before issuing thermal tenders.

Guidance & Commitments

Key Metrics