ADANIENSOL - Adani Energy Solutions Limited Share Price

In the earnings call for Q3 & 9M FY26, management at Adani Energy Solutions Limited (AESL) provided an optimistic outlook, highlighting significant operational and financial achievements. The adjusted PAT growth for the quarter was reported at 30%, and the company has successfully commissioned four transmission projects in the first nine months. They remain on track to commission an additional three projects in the coming months, including a landmark HVDC project, which is nearing completion.

The company's project pipeline now stands at approximately INR 78,000 crores. In the smart metering sector, AESL has installed around 19 lakhs meters this quarter, bringing the total to approximately 92 lakhs, with a target of surpassing 1 crore by year-end. Management also noted an improvement in capital management, including an upward revision of credit ratings from Moody's for two subsidiaries.

Financially, total income increased by 16%, with consolidated EBITDA reaching INR 2,200 crores, reflecting a growth of 21%. Additionally, the consolidated PBT surged by 43% to INR 800 crores. Looking ahead, management indicated strong prospects in both transmission and smart metering segments, with plans to capitalize on INR 25,000 crores across seven projects in the upcoming financial years.

They also anticipate a significant increase in market opportunities, expecting total bidding in transmission to reach INR 70,000-80,000 crores over the next year. The management emphasized a diversified business model and robust infrastructure will support growth across various sectors, including a focus on commercial and industrial (C&I) services, where they expect substantial revenue gains.

Question 1: "Do you think in the next 12 to 18 months, there will be more opportunities on the smart meter side?"

Answer: Yes, we expect significant action in smart metering bidding over the next few quarters. Several states are yet to finalize their bids, including Tamil Nadu and states like Karnataka and Telangana, which have had their DPR approved. Approval from the Ministry of Power will likely lead to new bid opportunities.

Question 2: "How do you see the transmission bids over the next 12 to 18 months?"

Answer: We anticipate bidding opportunities exceeding INR 70,000 crores to INR 80,000 crores based on approved projects. The pipeline exceeds INR 1 lakh crores, suggesting substantial upcoming opportunities despite current slowdowns.

Question 3: "What is the revised tentative commissioning date for the HVDC project?"

Answer: All work is completed, with testing ongoing. We expect the HVDC project to be commissioned in the next 30 to 45 days. Delays were due to issues requiring resolution in permissions and environmental concerns relating to cabling.

Question 4: "Can you confirm the cost for the Khavda Olpad project?"

Answer: The cost for the KPS-III, Khavda Olpad project is approximately INR 19,000 crores. We've achieved significant milestones, including critical approvals and ongoing construction activities.

Question 5: "What is the status on the Bhadla-Fatehpur HVDC project?"

Answer: All contracts are awarded, and basic engineering is completed. We have progressed significantly with environmental clearances. Despite some land acquisition challenges for Fatehpur, we expect to complete that in about a month.

Question 6: "What is the expected capex phase out as you complete upcoming HVDC projects?"

Answer: For the next five years, average capex in transmission will be around INR 18,000 crores to INR 20,000 crores yearly, which will increase as we add new projects to our portfolio.

Question 7: "How are you addressing challenges in execution, like delays in tendering and rain?"

Answer: We are addressing challenges by focusing on the training of skilled labor and securing Rights of Way (ROW) orders to ensure smooth execution. We'll see significant progress in capex this quarter, as the season improves.

Question 8: "What is your strategy regarding the use of surplus cash for capex and bond buybacks?"

Answer: We will prioritize de-leveraging through bond buybacks in our distribution business after covering capex needs. We're aiming to maintain a debt range of around 4 to 4.5x based on capex cycle.

Question 9: "What is the visibility for achieving the 6 crores smart meter target?"

Answer: While we initially forecasted 6 crores, we now aim for 5 crores due to a decrease in significant bidding opportunities in the last financial year. We expect the environment to improve with upcoming bids.

Question 10: "Can you detail your total net debt and projections for future levels?"

Answer: Our net debt is currently around INR 38,000 crores. We predict it to remain stable around INR 40,000 crores, reflecting ongoing amortization and new capex without needing to raise additional equity.