ADANIENSOL - Adani Energy Solutions Limited Share Price

The management of Adani Energy Solutions Limited provided a positive outlook for the forthcoming fiscal years. For FY27, the company anticipates a capex of around INR 22,000 crores, broken down into approximately INR 15,500 crores for transmission, INR 2,350 crores for distribution, and INR 3,900 crores for smart metering. Looking further ahead to FY28, capex is projected to increase to about INR 23,000 crores, with significant allocations still going towards transmission and distribution.

In terms of operational capabilities, the CEO highlighted that the company has successfully commissioned the Mumbai HVDC project, which is pivotal for augmenting the transmission capacity for Mumbai, alongside engaging in smart meter deployment where they installed 83 lakh meters, exceeding their target of 70 lakh meters, a notable achievement for the sector.

Management emphasized improvement in credit ratings amid increasing capex, maintaining that the majority of their assets possess ratings of AAA+ or AAA. A critical point of forward-looking strategy was mentioned, with the expectation that the Regulatory Asset Base (RAB) will grow significantly; specifically, it has expanded from INR 5,400 crores to over INR 10,500 crores due to ongoing investments, which is expected to drive further growth and cash generation.

Additionally, the company highlighted an exciting growth trajectory for the Commercial & Industrial (C&I) segment, having contracted around 5,000 megawatts of renewable capacity. They mentioned that about INR 150,000 crores of projects have already been identified for bidding, reflecting an optimistic business climate ahead.

Lastly, the operational metrics were strong, with distribution losses reduced to 4.2% from a previous 8.5%, and achieving a consistent operational and maintenance availability rate of 99.7%. The management remains confident about capturing more market opportunities going forward through disciplined capital management and progressive strategy implementations.

1. Question: "Can you help us with your expectation for capex in FY27 and FY28 for three businesses separately?"
   Answer: "We will target approximately INR22,000 crores of capex in FY27. The breakdown will be about INR15,500 crores for transmission, INR2,350 crores for distribution, and INR3,900 crores for smart metering. For FY28, capex is expected to be around INR23,000 crores, with transmission around INR20,000 crores, distribution around INR2,000 crores, and INR1,500 crores for smart metering, plus any additional orders."

2. Question: "Can you share the expectation for capitalization or commissioning in FY27, FY28?"
   Answer: "In FY27, we foresee capitalization of about INR21,000 to INR22,000 crores, which includes the full commissioning of the Mumbai HVDC project in FY26. In FY28, capitalization could be around INR13,000 crores, particularly as the HVDC projects begin to be commissioned in FY29."

3. Question: "What is the balance sheet leverage, where are we comfortable?"
   Answer: "We are comfortable operating with leverage around 4.5x to 4.7x. Typically, our funding structure relies on financing assets at a 70:30 ratio, which allows us to meet existing capex requirements through debt without affecting financial stability."

4. Question: "Can you help me what is the capitalization for FY26?"
   Answer: "For FY26, total capitalization stood at approximately INR15,300 crores, broken down into INR10,260 crores for transmission, INR1,511 crores for distribution, and INR3,556 crores for smart metering."

5. Question: "Can you share HVDC project completion status and any related ROW challenges?"
   Answer: "The Fatehpur-Bhadla HVDC project construction has begun without significant ROW issues. For Khavda-Olpad, we have finalized contracts and plan to start construction soon, as we anticipate ROW possession. Thus far, we're on track with our plans."

6. Question: "What is the EBITDA from the projects commissioned in FY26 for FY27?"
   Answer: "The EBITDA run rate contribution from projects commissioned in FY26 for the next financial year is expected to be around INR1,600 crores. This will include revenue from newly operational assets."

7. Question: "How do you expect to book revenues for Mumbai HVDC in FY27?"
   Answer: "Revenues will be booked based on a regulatory asset base (RAB) approach. The full-year tariff from the Mumbai HVDC project is anticipated to be around INR1,300 crores once we begin accruing these amounts in FY27."

8. Question: "Is the cost of the Mumbai HVDC project fixed at INR7,000 crores?"
   Answer: "Yes, the cost to complete the Mumbai HVDC project is fixed at INR7,000 crores, and we do not expect to claim any additional costs."

These answers encapsulate the critical aspects of the earnings call, reflecting both the strategic direction and financial details shared by the management team.