ADANIPOWER - Adani Power Limited Share Price

Management provided an optimistic outlook for Adani Power Limited, anticipating a rebound in power demand as the current base effect wears off. Key points include:

1. Power Demand Recovery: Management expects strong power demand in the upcoming year, bolstered by high bilateral PPA demand and a focus on long-term capacity tie-ups to mitigate rate volatility.

2. Capacity and Revenue Growth: With over 90% of current operating capacity under PPAs, the company aims for stable earnings and liquidity. New PPAs are anticipated to generate higher EBITDA due to improved capacity charges compared to legacy PPAs.

3. EBITDA Projection: The management noted that upcoming capacity additions would positively impact earnings growth, with new PPAs ultimately leading to superior per-megawatt EBITDA.

4. Financial Position: Management reported strong liquidity, with total debt of INR 45,331 crores and net debt at INR 38,679 crores. The company has raised INR 7,500 crores through non-convertible debentures to finance expansion and enhance working capital.

5. Project Execution: Progress is notable in the 23.7 GW thermal expansion program, with key projects like Mahan Phase-II (80% complete), Raipur Phase-II (44% complete), and Raigarh Phase-II (38% complete) on track for commissioning from FY '27 onwards.

6. Long-Term Growth Plans: Management highlighted a capital expenditure plan of INR 2 trillion to expand capacity to 42 GW by FY '32, which is expected to generate considerable EBITDA and cash flow to cover all debts, maintaining financial stability.

Overall, the management remains confident in the long-term power demand outlook for India and believes that Adani Power is well-positioned to capitalize on upcoming opportunities while ensuring strong operational efficiency.

Major Questions and Detailed Answers from the Q&A Section

Question 1: What is the tariff for the Assam and Karnataka PPAs, including fixed and variable charges?

• Answer: For the Assam PPA of 3,200 megawatts, the total charge is INR 6.30/kWh, with the capacity charge being INR 4.16/kWh. For the Karnataka PPA of 570.5 MW with APL Raigarh, the tariff is INR 5.78/kWh, and the fixed component is INR 4.5/kWh.

Question 2: What is the capex incurred in 9 months FY '26, and when can we expect the upcoming facilities to be commissioned?

• Answer: We have incurred capex of about INR 15,000 crores this year, including advance payments to BTG suppliers. We expect Korba Phase-II to be added next year and the Mahan, Raipur, and Raigarh projects will be completed by the middle of FY '29.

Question 3: Can you provide PLF, revenue, and EBITDA for the Godda power plant?

• Answer: For Quarter 3, Godda's continuing revenue is INR 2,210 crores and EBITDA is INR 1,092 crores. For the 9-month period, the continuing revenue is INR 6,787 crores, and EBITDA is INR 3,247 crores.

Question 4: Will dependence on the merchant market reduce with the operation of Vidarbha and Karnataka plants?

• Answer: Our strategy has effectively reduced our open capacity from 80-20 to now 90-10, which minimizes exposure to merchant tariffs and ensures assured revenue and EBITDA, mitigating market volatility.

Question 5: What were the merchant and long-term volumes for the quarter?

• Answer: The merchant volume for the quarter was 4.3 billion units, and for the nine-month period, it stood at 15.65 billion units.

Question 6: Can you quantify the impact of significantly lower merchant prices and imported coal prices year-on-year?

• Answer: For Q3, merchant realization was INR 4.37/kWh versus INR 4.56/kWh last year, and for 9 months, it was INR 5.44/kWh compared to INR 6.16/kWh. Imported coal prices averaged $104/tonne this quarter, down from $123/tonne last year.

Question 7: What is the status of the large PPAs for Rajasthan and Uttarakhand?

• Answer: The Rajasthan tender is under review as the regulator wants the DISCOM to present its demand case. For Uttarakhand, bid documents have been released, and we expect bids to be submitted in the coming months.

Question 8: What is the weighted average cost of borrowing now compared to last year?

• Answer: Our long-term interest cost is around 8.5%, and the weighted average cost is below 9% this year, reflecting a significant reduction in borrowing costs compared to last year.

Question 9: What is the status of the Godda power plant relation and use of domestic coal?

• Answer: The supply and payment collection from Bangladesh are regular, with payments for around two months due. We are allowed to use domestic coal as long as it is commercially sourced and not from government-controlled supplies.

Question 10: Can you provide details about the Assam greenfield project capex per megawatt and equity-debt mix?

• Answer: The estimated capex for the Assam project is about INR 10 crores per megawatt. We plan to fund most of our capital expenditures from internal accruals without project-wise financial closure.

These responses summarize key points and figures discussed during the Q&A, providing a clear overview of Adani Power's operations and forward guidance.