SJVN Ltd Q4 FY2024 Concall Summary

Key Takeaways

• Execution delays dominate the quarter: Three major projects (Buxar thermal, Arun-3 hydro, Bikaner solar) slipped, pushing commissioning timelines out by 3-6 months, while impairment charges of Rs. 138.70 crore on legacy wind assets underscored portfolio quality risks.
• Incentive income structurally reset lower: Regulatory changes now restrict above-100% plant operations to the June-September peak season, driving a Rs. 71.92 crore YoY drop in incentive income, a headwind that will persist.
• A 12,000 MW portfolio by March '26 is the anchor target: Management claims only a 5-6 month slippage against this goal, with 2,048 MW of renewable capacity slated for commissioning in FY25 alone.
• The IOCL joint venture opens a new growth axis: The 50-50 JV targets green hydrogen, renewables, hydro and EV charging, leveraging IOCL's balance sheet and its own power demand, with pump storage and the 3,097 MW Etalin project flagged as early collaboration opportunities.
• What to watch next quarter: Whether Bikaner solar panels actually arrive from June as promised, progress on Nepal land acquisition for Arun-3's transmission line, and the size and pricing of the SGEL QIP.

Project Execution & Slippages

• Buxar thermal (1,320 MW): Commissioning slipped 3-4 months from June because of agitation by local farmers and disruption in plant activities. Unit 1 is now targeted for Q3 FY25, Unit 2 for Q4 FY25. Land issues around the railway corridor and water corridor are being resolved, with the Bihar government providing government land for the water pipeline.
• Arun-3 hydro (900 MW, Nepal): The commissioning target slipped further due to challenges in the dam area. Land acquisition for the transmission line remains the bottleneck; management expects to complete it in another 3-4 months and has requested support from the highest authorities in Nepal. The plant is now targeted for Q2 or Q3 of FY26 (October-November 2025).
• Bikaner solar (1,000 MW): Delayed due to problems with local domestic panels. The situation is expected to improve with panels arriving from June, and commissioning is now targeted for Q3 FY25.
• 12,000 MW target: Management stated the portfolio will cover almost 12,000 MW by March '26, with slippage of only 5-6 months against the original plan.

Sushil Sharma: "Because of agitation by local farmers and disruption in our plant activities, this Buxar commissioning has been slipped to three, four months from June and because of a challenge in dam area in this Arun-3 Project, see, though the commissioning target has slightly also slipped further..."

Financial Performance & One-Offs

• Incentive income reset: Total incentive income fell to Rs. 182 crore from Rs. 253.92 crore YoY. After September, the government restricted operating plants above 100% capacity, permitting it only during the peak season (June to September), whereas previously operations up to 110% were allowed.
• Wind portfolio impairment: Rs. 138.70 crore impairment was booked under Ind-AS 36 across three wind projects. Sadla Wind (Rs. 101 crore) was impaired because its tariff of Rs. 2.43/unit was well below the over Rs. 3/unit prevailing at its 2018-19 commissioning, a PPA signed under duress due to lack of alternatives. Khirwire Wind was impaired because its design energy of 8.5 crore units was never achieved, with maximum generation of 7.3 crore units and an average of 6 crore units over 5-6 years.
• Exceptional gain: A Rs. 104 crore gain was booked from the reversal of a provision made for an arbitration award against the Nathpa Jhakri project. The company had provided for the award, challenged it in court, and the double bench decided in SJVN's favor.
• Shortfall billing: Against design energy of 853.3 crore units, the company generated 813.14 crore units and billed Rs. 41 crore for the shortfall as per regulations.

Sushil Sharma: "The tariff of the Sadla wind power project is 2.43 per unit, whereas during the period it was commissioned in '18-'19, the tariff was almost above Rs. 3. But somehow we were not having the PPA, and we were compelled to sign PPA with the juvenile at the lower tariff and that's why we have to go for the impairment loss."

Capacity Addition & New Wins

• Q4 FY24 commissioning: Two solar projects added 150 MW (Gujrai Solar 50 MW, Raghanesda Solar 100 MW), contributing approximately Rs. 99 crore to annual revenues.
• Projects dedicated by the Prime Minister: In March 2024, the PM dedicated 75 MW Parasan Solar, 75 MW Gurhah Solar, 50 MW Gujrai Solar, and 60 MW Naitwar Mori Hydro, and laid the foundation stone for 382 MW Sunni Dam Hydro, 15 MW Floating Solar in Himachal, and 70 MW Solar in Assam.
• New project wins: SJVN, through its subsidiary SGEL, bagged five solar projects totaling 2,252 MW through open competitive bidding in Q4 FY24.
• Renewable pipeline: 2,048 MW under construction is to be commissioned in FY25, with the balance 477 MW in FY26. For FY27, management expects more than 2 GW of solar/wind addition, with approximately 2 GW added every year thereafter.

Strategic Initiatives & Partnerships

• IOCL joint venture: A 50-50 JV is being formed with Indian Oil Corporation. IOCL is a large power consumer with a net-zero target, and the JV will venture into green hydrogen, renewables, hydro, and EV charging. IOCL's large balance sheet is seen as a key enabler. The approval process will take 2-3 months, after which the company will be incorporated. IOCL has also expressed strong interest in pump storage.
• Etalin project collaboration: Management indicated the 3,097 MW Etalin project in Arunachal Pradesh could be developed in collaboration with IOCL. A tender for Etalin will take 6-12 months to issue and will be in multiple packages.
• SGEL QIP: SGEL is planning a QIP in the current year, offering 10-15% (up to a maximum of 20%) of its equity to the public. The size is yet to be determined.
• Credit facility secured: SJVN secured a Rs. 10,000 crore construction line of credit for upcoming renewable energy projects from leading domestic and international financial institutions.
• PM-Surya Ghar scheme: SJVN has been allotted three states (Himachal Pradesh, Punjab, Arunachal Pradesh) and assigned responsibility for rooftop solar on government buildings across 18 ministries. It has also been designated as a Renewable Energy Implementing Agency (REIA) by MNRE.

Akhileshwar Singh: "IOCL in itself is a consumer. They need a lot of power and they have also target to become the net zero and we will venture into the green sector and with our collaboration, 50-50 percent joint venture partnership, we will be able to take more investment in the project in hydro also and renewable also plus the hydrogen sector also we will go jointly."

Balance Sheet & Funding

• Debt servicing comfort: During construction, only interest is payable, not principal. Management stated it has sufficient projection for interest payments and expects revenue from renewable projects commissioning next year to support debt servicing.
• Peak debt undisclosed: Management declined to provide a peak debt figure by March '26, stating it will be intimated separately.
• Equity for tendering-stage projects: Management also declined to quantify the equity required for projects in the tendering stage, saying it will be intimated separately.
• PPA for Nepal power: The PPA for the Arun-3 plant is expected to be concluded within 2-3 months and become consumable within this year.

Akhileshwar Singh: "In fact, during the construction we have to pay the interest only, not the payment of the principal amount. And that we are having sufficient projection."

Upcoming Tenders & Pumped Storage

• Lower Arun tender: Expected to be issued within a month or two.
• Etalin tender: Will take 6-12 months to issue and will be structured in multiple packages.
• Pumped storage progress: No tender for construction is expected this fiscal year. A DPR for a 2,400 MW PSP in Mizoram is under preparation and will take 1.5 years; a tender may come in FY26.
• JV with MAHAGENCO: A JV for 5,000 MW of renewable energy projects is under process of formation.
• SGEL Assam JV: SGEL has already formed a JV with Assam Power Distribution Company for 1,000 MW of renewable energy projects in Assam.

Guidance & Commitments

Key Metrics