ADANIGREEN - Adani Green Energy Limited Share Price

Management's outlook for Adani Green Energy Limited remains optimistic, emphasizing a robust commitment to sustaining growth and operational excellence. Key forward-looking points include the following:

1. Capacity Expansion: Adani Green aims to achieve 50 gigawatts (GW) of operational capacity by 2030, with a significant contribution from greenfield projects. In FY26, the company added 5.1 GW, achieving a total operational portfolio of 19.3 GW.

2. Energy Sales Growth: The company's energy sales surged by 34% year-on-year, reaching 37.6 billion units, attributed to strong operational performance and capacity enhancements.

3. Financial Performance: Revenue from power supply increased by 22% year-on-year to INR 11,602 crores, while EBITDA grew by 23% to INR 10,865 crores, reflecting an EBITDA margin of 91.2%.

4. Battery Storage Investments: The plan includes ramping battery energy storage systems (BESS) to 10 gigawatt-hours (GWh) by FY27, with capital costs anticipated around INR 15,000 crores (at INR 1.5 crores per megawatt-hour).

5. PPA Strategies: The average blended power purchase agreement (PPA) rates are projected at INR 3.10, with expectations to contract solar at INR 2.60-2.80 and wind at INR 3.70-3.80, ensuring profitability amid market fluctuations.

6. Evacuation Capacity Improvements: The company expects to improve its transmission and evacuation capabilities significantly in Khavda, adding an anticipated 14-15 GW in the forthcoming months to facilitate better power delivery.

7. Sustainability Commitment: The company's 19.3 GW operating portfolio is expected to power over 8.7 million homes and avoid approximately 36 million tons of CO2 emissions annually, reinforcing its focus on sustainable practices.

8. Market Adaptability: Management is cognizant of potential curtailments and is determined to enhance battery storage to mitigate risks while ensuring project commitments primarily align with long-term contracts.

Overall, Adani Green Energy is positioned strategically to leverage its assets and enhance its market presence while addressing future challenges.

Question 1: "Sagar, you talked about the BESS impact as you grow the operational side from 1.4 gigawatts to 10 gigawatts by '27. If you can just help us understand some of the milestones to getting there, supply chain dependencies, grid connectivity, what is it going to take to ramp to that level in '27? And how prepared are you?"

Answer: We've already added significant BESS capacity, aiming to reach 3 gigawatt hours at Khavda shortly. Key sensitivities include capital flexibility and supply chain management. Batteries mitigate grid availability issues, and we're confident in maintaining our ramp-up, targeting 10 gigawatt hours moving forward.

Question 2: "How should we think about battery economics versus core solar wind portfolio in terms of EBITDA margin, capital intensity, and payback period?"

Answer: Battery economics are comparable, or slightly better, than our renewables portfolio. We're funding BESS at about INR 1.5 crores per megawatt hour, aiming for INR 25 lakhs of EBITDA per megawatt hour. These economics remain favorable, even considering external market factors.

Question 3: "What is the loss in EBITDA in FY26 due to lower availability and lower prices realized compared to long-term rates for the infirm power we were selling?"

Answer: We lost about INR 500 crores in FY26 due to curtailment. If we consider expected rates for contracting merchant capacity this year, the total could exceed INR 1,300 to 1,500 crores in EBITDA losses, which we don't anticipate ongoing.

Question 4: "Can you just talk about the quantum of battery in terms of megawatt and megawatt hour and number of cycles you're looking to run and capital costs likely to incur in FY27 for the batteries?"

Answer: We're adding over 10 gigawatt hours of batteries this year, designed in a 3-hour configuration, translating to approximately 3.3 gigawatts of dispatch capacity. We're budgeting INR 1.5 crores per megawatt hour, projecting around INR 15,000 crores in total capex for battery storage.

Question 5: "Is the plan beyond that to focus more on the C&I/data center space via Adani Energy Solutions?"

Answer: Yes, our strategy includes leveraging sister company Adani Energy Solutions for C&I customers. We have 28 gigawatts signed up and will ensure more than 90% of AGEL's installed capacity is secured through long-term contracts.

Question 6: "What do you expect the average blended PPA rates to be for the next fiscal?"

Answer: Our average blended PPA rates are currently around INR 3.10. Moving forward, we're targeting solar contracts in the INR 2.60 to 2.80 range and wind contracts around INR 3.70 to 3.80, which aligns with our profitability and return expectations.

Question 7: "With respect to your slide on PPA-based capacity versus merchant capacity, to what extent will current PPA capacities still remain merchant?"

Answer: Currently, out of our 19.3 gigawatts, 9.7 gigawatts are fully under PPAs. We have 5.3 gigawatts operating as infirm power, intended to convert to PPAs upon readiness, and 4.2 gigawatts remain pure merchant capacity, which we will tie into long-term contracts swiftly.

Question 8: "How are you seeing the on-ground transmission connectivity coming up, especially in Khavda?"

Answer: We can currently execute 7-8 gigawatts per year, but will add about 4.5-5 gigawatts this year due to evacuation constraints. We're ramping up battery installations, which will mitigate transmission issues, and expect significant evacuation improvements over the next 12-15 months.

Question 9: "Could you clarify the evacuation facilities coming up in Khavda or Rajasthan in FY27 and FY28?"

Answer: By December 2026, we expect about 7 gigawatts of evacuation at Khavda, with an additional 7 gigawatts by March 2027. We're looking at a total of 14 to 15 gigawatts of additional capacity, subject to typical project timeline variances.

Question 10: "Given the current geopolitical scenario, have you seen any changes in the policy environment regarding renewable energy?"

Answer: Yes, electrification is now a priority in India, offering significant advantages to the renewable sector. The government's focus is on domestic electrification to lessen dependence on volatile imports, enhancing prospects for the renewable energy industry overall.