SJVN Ltd Q3 FY2023 Concall Summary

Key Takeaways

• Earnings jump despite lower generation: PAT rose ~25% YoY to ~₹291 Cr, driven by a 19% YoY increase in total income, even as generation fell 5.7% YoY due to poor hydro catchment rains.
• Project pipeline is the core story: The company is targeting a massive commissioning wave of over 3,000 MW by the end of FY2024, which would push installed capacity past 5,000 MW.
• A strategic exit unlocks trapped capital: SJVN exited the stalled Kholongchhu JV in Bhutan, recovering its entire ₹240 Cr equity plus ~₹114 Cr in interest, freeing up capital for projects where it has full control.
• Execution risks are live and acknowledged: The Buxar thermal project faces labor shortages after a 10-day work stoppage, and the Naitwar Mori hydro project is racing to commission without a signed PPA.
• What to watch next quarter: The pace of labor returning to the Buxar site, the signing of a PPA for Naitwar Mori before its March commissioning target, and any further clarity on the financing strategy for the newly won 1,385 MW of renewable projects.

Project Execution & Commissioning Pipeline

• FY2024 is the delivery year: Management is targeting the commissioning of the Buxar thermal project and the Arun-3 project in Nepal by the end of FY2024, a goal it is pursuing "despite many odds."
• Naitwar Mori on a tightrope: The 60 MW project in Uttarakhand is targeting commissioning by the end of March 2023, but a PPA has not yet been signed, forcing the company to prepare to sell power on the open exchange as a fallback.
• A wave of renewable projects: Six renewable projects totaling 1,385 MW, including the 1,000 MW Bikaner solar project, are all expected to be commissioned within FY2024.
• Buxar disruption creates a near-term risk: A 10-day work stoppage in January over land compensation disputes caused the labor force to drop from ~5,000 to ~2,000–2,500, with management expecting the remaining workers to return in the next week or 10 days.

N L Sharma: "we are targeting the commissioning of this project by the end of next financial year FY2023 though there are many odds what we are trying to manage the things to our best."

Strategic Portfolio Reshaping

• Kholongchhu exit removes a deadlock: The 50:50 JV with a Bhutan PSU suffered from a structure that caused "decision paralysis," with no actual construction work for 4–5 years, prompting SJVN to exit and recover its full ₹240 Cr equity plus 9% interest.
• Capital reallocation to new wins: The company has recently won 488 MW of new renewable capacity, including 105 MW of floating solar in Maharashtra and 100 MW of wind, all of which will be housed under its subsidiary, SJVN Green Energy Limited (SGEL).
• Sunni Dam investment locked in: The 382 MW hydroelectric project received CCEA investment approval for ₹2,615 Cr, and the major civil and hydro-mechanical packages have already been awarded to the lowest bidder.

N L Sharma: "most of the issues were just not decided because of some stalemates. So that structure did not succeed"

Financial Health & Capital Management

• Profit growth decoupled from generation: A 19% YoY jump in total income to ₹723 Cr drove a ~25% PAT increase, more than offsetting the 5.7% decline in generation and a marginal drop in capacity incentives.
• Securitization fuels the growth pipeline: The company raised ₹1,000 Cr through securitization, explicitly earmarked for equity infusions and debt requirements in under-construction projects, not for higher dividends.
• Dividend floor is set, not the ceiling: An interim dividend of ₹1.15 per share was declared, and management assured that the final dividend will at least meet the Government of India guideline of 5% of net worth or 30% of PAT.
• Finance costs tick up: Finance costs increased during the quarter as the company took on new bank loans, with the quarter including a ₹45 Cr FERB component.

N L Sharma: "...this is assured that we will at least pay what is required under the Government of India guidelines 5% of net worth or 30% of the PAT. We will surely meet that guideline."

Commercial Strategy: PPAs vs. Merchant Risk

• A deliberate shift in power sales strategy: For hydro projects without PPAs, management is weighing the dynamics of the power trading market, considering a hybrid model of partial long-term PPAs and keeping the rest available for higher-value Round-the-Clock (RTC) supply.
• Naitwar Mori as the first test case: The project is on track to commission without a signed PPA, and management is prepared to sell its power through the open exchange, a strategy that carries both higher upside and merchant risk.
• Renewable projects have a backstop: For competitively bid renewable projects, a PPA is obligatory on the bidding agency, while for open-ended projects, the company plans to install at its own rate and bundle the power for RTC supply.

N L Sharma: "We will commission, we are targeting by the end of March. So until unless the PPA is signed with any DISCOM or any other utility. We can sell the power through open exchange also."

Guidance & Commitments

Key Metrics