Adani Power Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Earnings surge on PPA strength: Q4 EBITDA rose 27% YoY and PAT rose 64% YoY, driven by higher PPA tariff contribution, cost discipline, and recently acquired assets.
• Massive thermal expansion underway: The company targets 23.7 GW of new thermal capacity by 2032, with 13.3 GW already tied to long-term PPAs, and expects to commission 1.32 GW in FY27 alone.
• Merchant risk being deliberately shrunk: Merchant exposure is down to 5% of capacity from 16% at the start of the year, as management actively converts open capacity to long-term PPAs to lock in returns before renewable penetration depresses merchant prices.
• Balance sheet path to debt-free: Management sees a line of sight to repaying all debt by FY31-32, with huge cash surpluses thereafter, funded by internal accruals from highly earnings-accretive new PPAs.
• What to watch next quarter: The signing of the 1,600 MW Maharashtra PPA within three months, the commissioning of Korba Phase-II Unit 1 in Q2, and any update on the Mahan timeline where labour and LPG availability remain constraints.

Thermal Capacity Expansion

• 23.7 GW target by 2032: The company has laid out a plan to add 23.7 GW of thermal capacity, with 13.3 GW already secured under long-term PPAs that carry materially better capacity charges than the legacy portfolio.
• Near-term commissioning: Korba Phase-II Unit 1 is expected in Q2 FY27 (June-September), Unit 2 before year-end. Mahan Phase-II Unit 1 is targeted for Q4 FY27, at most Q1 FY28, with Unit 2 six months later, though the Mahan timeline faces headwinds from geopolitical impacts on labour and LPG availability.
• Annual trajectory: FY27 will add 1.32 GW, FY28 will add 1.6 GW (Mahan), and FY29 through FY32 will each add 4 GW or more. Management acknowledged deferring commissioning targets by an average of six months across financial year boundaries but stated the 34 GW by 2030 target remains on track.
• Korba EBITDA contribution: Estimated at approximately INR1,000 crore for FY27, with a full-year contribution in FY28 that will be higher still, and further upside if the capacity is placed under a PPA.
• Capex funding: INR25,000 crore planned for FY27 and INR33,000 crore for FY28, as part of the overall INR2 lakh crore expansion plan, with the majority funded from internal accruals over time.

Khyalia: "We should be in a position to achieve INR50,000 crore conservatively by FY 2031. If what we have planned today, if we could achieve that and let's say, no issues arise during this period related to like what presently we have et cetera. In that case, we can touch this even in 2030."

PPA Strategy & Merchant Risk

• Deliberate shift to long-term contracts: Management is actively converting open capacity into long-term PPAs, viewing merchant prices as structurally vulnerable as renewable penetration increases. Merchant exposure now stands at only 5% of 18,000 MW, down from 16% at the start of the year.
• Maharashtra 1,600 MW win: A letter of award has been secured from Maharashtra DISCOM for a 1,600 MW PPA, with the PPA expected to be signed within three months and commissioning targeted 48 months thereafter. The project location is not yet assigned but is likely Raigarh, Raipur, or Korba.
• PPA economics: New PPAs are described as highly earnings-accretive and expected to generate significant cash flows. When asked whether EBITDA is better under PPA versus merchant for converting capacity, management declined to compare directly, stating PPA provides surety while merchant can deliver upside or downside depending on volatility.
• Merchant accounting nuance: The 20-21% merchant figure reported for the full year reflects the average open capacity across the year, and also includes power bought from the market to service PPA obligations when a PPA-based station is out of service.

Khyalia: "We feel, we are of the view that when more and more renewables will get added, the prices of merchant are bound to go down. So that is the risk which we are trying to mitigate by signing the more and more."

Power Demand & Operating Environment

• FY26 demand was unusually weak: Power demand grew only 0.8% in FY26 due to an early and extended monsoon lasting almost until November, followed by cold weather. A good revival began in March as warmer weather arrived.
• FY27 outlook is strong: Management expects strong growth in both overall power demand and peak demand in FY27, with higher PPA offtake and stronger bilateral demand. PLF is expected to be far better than last year, supported by rapidly increasing power demand and growing dependence on baseload power given the geopolitical scenario.
• Coal supply secure: There is no coal shortage, and domestic coal supply is not directly impacted by geopolitical issues. Imported coal faces some price impact from higher bunker fuel and shipping costs, but these are passed through.
• Bangladesh receivables improving: The outstanding balance has declined and regular payments are being received. A disputed amount is under reconciliation, with an expert appointed to hear both parties; if the opinion is not accepted, the party can approach the Singapore International Arbitration Council.

Khyalia: "The only way to combat this is to mitigate the fallout, which means we have to become self-sufficient in our energy needs. This is vital for the economy's health and growth."

New Ventures: Nuclear, Hydro & Acquisitions

• Nuclear power entry: The company has incorporated several SPVs in India for investment in nuclear power projects and is identifying sites and seeking necessary approvals. All sites will be new, not existing thermal sites. Management is waiting for government rules to be notified and offered no timeline.
• Bhutan hydro SPV: An SPV has been incorporated in Bhutan for setting up a 570 MW hydro power plant.
• Jaiprakash resolution plan: Adani Power is the implementing agency, taking over a 180 MW asset within JAL and JAL's 24% shareholding in Jaiprakash Power Ventures, which holds three generating stations: Nigrie, Bina, and Vishnuprayag, for a total of four locations.
• Acquisition impact on fixed assets: Net fixed assets rose approximately 25% YoY versus only 6-7% capacity increase, driven by INR22,000 crore in expansion capex, the acquisition of Vidarbha (600 MW operating capacity), and capital work in progress.

Financial Performance & Balance Sheet

• Q4 EBITDA walk: The 27% YoY increase was driven by higher PPA tariff contribution, cost discipline, better operating efficiency, and contribution from recently acquired assets. Full-year continuing revenue was broadly stable despite a lower margin rate, as tariffs for imported coal-based PPAs fell with import coal prices.
• PAT boost: Q4 PAT rose 64% YoY, aided by strong operating performance and lower tax charges.
• Minority interest jump: The QoQ increase from INR8.5 crore to INR254 crore reflects a full 12 months of Coastal Energen and Moxie Power operations versus a partial prior year, plus the impact of a new PPA signed last quarter for Moxie Power's Unit 2 (558 MW with Tamil Nadu).
• Debt raised: INR7,500 crore in secured non-convertible debentures was raised during the quarter, along with interim corporate debt from banks.
• Debt-free trajectory: Management stated that by FY31-32 the company can repay its entire debt, and from FY32-33 onward it will have huge cash surpluses with multiple avenues for deployment, potentially becoming a debt-free company.

Jha: "By FY 31-32, we can pay our entire debt. And thereafter also from FY32-33, we will have huge cash surplus... multiple avenues we have, we can deploy to leverage far more better and it may be a debt-free company."

Guidance & Commitments

Key Metrics