SJVN Ltd Q2 FY2025 Concall Summary

Key Takeaways

• Navratna status conferred, a milestone moment: The upgrade grants greater operational and financial autonomy, arriving as the company scales its project pipeline and prepares a green energy subsidiary IPO.
• Execution engine delivered record hydro generation: Nathpa Jhakri, Rampur, and Naitwar Mori all hit their highest-ever quarterly or single-day generation, demonstrating strong operational performance from the core fleet.
• The commissioning pipeline is large but visibly soft: Management targets 1,888 MW for FY25, yet candidly warns of "some slippage" due to land, supply-chain, and rail-infrastructure delays at Buxar and Bikaner.
• REIA tariff risk is emerging: Hybrid tender tariffs discovered above current market lows, and management acknowledged that 1-2 PPAs may need to be terminated if power sale agreements with states cannot be signed.
• What to watch next quarter: Whether Buxar Unit 1 meets its January 2025 deadline, the pace of Bikaner module deliveries from Tata's still-stabilizing DCR plant, and any concrete PPA cancellations in the REIA portfolio.

Execution & Commissioning Pipeline

• Record hydro output: Nathpa Jhakri generated 345.1 crore units in Q2, Rampur delivered 95.56 crore units, and all three operating hydro plants set single-day generation records since commissioning.
• Buxar thermal inches forward: Boiler light-up for Unit 1 was achieved on 2 October 2024, a necessary step toward synchronization, but the commissioning date has slipped from Oct-Dec 2024 to January 2025.
• Buxar delay drivers: Rail infrastructure for coal supply is not ready, and land acquisition disputes are being resolved through the LARRA Court in Bihar with higher compensation, a process expected to take another 6-7 months.
• Bikaner solar supply bottleneck: Tata Power's DCR module plant is not yet stabilized, delaying deliveries; management now expects 500 MW by March 2025 and the remaining 5 MW by June 2025.
• Broader solar land issues: Projects where SJVN arranges land itself are facing acquisition delays, pushing timelines out by a few months.
• Naitwar Mori ramping but seasonal: The newly operational plant is showing good signs and is expected to exceed its design energy of 26.5 crore units annually, though generation will dip in coming months with lower water levels.

Singh: "Maybe some slight changes may be there because of the many problems during the execution stage. Some -- might be some shortfall or some slippage will be there."

Portfolio Expansion & New Mandates

• Navratna status unlocks flexibility: The upgrade, conferred by the Department of Public Enterprises, marks the 25th Navratna in India and promises greater delegated powers for investment and partnership decisions across SJVN's 36-year journey.
• First pumped storage entry: The Government of Mizoram allocated the 2,400 MW Darzo Lui Pumped Storage Project to SJVN in July, diversifying the portfolio into a technology critical for grid balancing.
• Maharashtra hybrid push: An MoU signed with the state government covers a 100 MW pumped storage project and a 505 MW floating solar project, extending the floating solar expertise demonstrated at Omkareshwar.
• Nepal hydro advancing: The Prime Minister approved a INR 5,792.36 crore investment for the 669 MW Lower Arun project, while Arun-3 achieved a key milestone with the hydro test of its first unit spiral casing.
• Rooftop solar mandate: SJVN has been allotted three states (Himachal Pradesh, Punjab, Arunachal Pradesh) and 18 central ministries under the PM Surya Ghar scheme, with vendor empanelment underway.
• Tender engine running hot: The company floated 7.5 GW of tenders in Q2 alone, exceeding its target, and has cumulatively floated 18.6 GW and awarded 8.1 GW to date.

REIA Tariff Risk & PPA Challenges

• Tariff compression creates PPA fragility: Some hybrid tenders discovered tariffs around ₹3.50/kWh, while the lowest current discovered price has fallen to ₹3.19/kWh, making DISCOMs reluctant to sign power sale agreements at the higher rates.
• 1-2 terminations possible: Management acknowledged that if PSAs with states cannot be secured for these higher-tariff projects, it may have to terminate the PPAs, though it stated it is not yet expecting this outcome.
• Broader REIA context: SJVN's role as a renewable energy implementing agency, listed by MNRE to help meet the 500 GW by 2030 target, means its tender portfolio is large and exposed to the same downward tariff trend.

Singh: "Day by day, the prices are getting reduced. Those — there may be 1 or 2 cases of hybrid tender where the price — the tariff discovered is more. In case we are not getting PPA signed with the state, then it will be PSA signed with the state. Then maybe we may have to think of terminating the PPA."

Capital Structure & Subsidiary Moves

• Green energy IPO on track: The board approved the proposal for a subsidiary IPO; the company is now approaching the ministry and DIPAM for approvals and appointing bankers, with completion expected by March 2025.
• Capex trajectory revised: FY25 capex is now pegged at ₹9,000 crore, stepping up to ₹12,000 crore in FY26 and ₹12,000-13,000 crore in FY27, reflecting the heavy project pipeline.
• Interest cost steady: Quarterly interest is expected to remain around ₹200 crore, with the increase this quarter driven by Naitwar Mori moving into operation and capitalizing its debt.
• Assam joint venture formed: A 51:49 JV with APDCL (Assam Power Distribution Company) was established, with SJVN holding the controlling stake, expanding its footprint in the northeast.

PSU Constraints & Strategic Choices

• EPC backward integration ruled out for now: An analyst suggested SJVN build its own EPC division to capture cost efficiencies given the scale of its pipeline. Management responded that it only does supervision and control, outsourcing contract work, and that PSU constraints make such a move impractical.
• Approval burden cited as structural limit: Management pointed to CAG, CVC, and CVI oversight, plus the need for multiple approvals, as reasons it cannot match the decision speed of private peers like Reliance or Adani, even when considering new ventures.
• Manpower cost disadvantage: The company acknowledged its manpower costs are structurally higher as a PSU, which weighs against vertical integration into EPC or O&M.

Singh: "But having a government company, we have to take a lot of approval... There is CAG. There is a CVC. There is a CVI. So we cannot take decision like them to go start a work or start a new venture."

Guidance & Commitments

Key Metrics