Ladies and gentlemen, good day, and welcome to the JSW Energy Q1 FY26 Earnings Conference Call hosted by JM Financial Institutional Securities. As a reminder, all participant lines will be under listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sudhanshu Bansal from JM Financial for his opening remarks. Thank you, and over to you, sir.
Thank you, Muskan. Good evening, everybody. On behalf of JM Financial , I welcome you all to the conference call of JSW Energy to discuss the 1Q FY2026 results. We have with us the leadership team of the company led by Mr. Sharad Mahendra, Joint Managing Director and CEO, Mr. Pritesh Vinay, Director of Finance and CFO, and Mr. Vikas Chaudhary, Head of Investor Relations and Treasury. Thank you so much, sirs, for your kind presence and giving us the opportunity to host the call. I would also like to congratulate the entire team for a very, very good performance. With this, I would like to hand over the call to Sharad sir for introducing his team and opening remarks and taking the call forward. Over to you, sir.
Thank you, Sudhanshu. Good evening, ladies and gentlemen. Thank you all for joining us today. It is my pleasure to share the highlights of our performance for the quarter gone by. JSW Energy commenced the year on a strong footing, marked by robust growth momentum and solid earnings performance. Our results reflect not only superior earnings growth but also the stability and quality of our earnings, underscoring the resilience of our business model and the disciplined execution of our strategy. With a robust under-construction portfolio and a continued focus on efficient capital allocation and execution excellence, we are well positioned to sustain this growth trajectory and deliver high-quality returns to all stakeholders. During the quarter, we successfully added 1.9 GW of new capacity, increasing our total installed capacity to 12.8 GW. This represents a substantial year-on-year growth of approximately 70%, up from 7.6 GW in the corresponding period last year.
Net generation also witnessed a robust increase of 71% year-on-year, rising from 7.9 billion units to 13.5 billion units, reflecting the enhanced operational efficiency and expanded asset base. The addition of 1.3 GW of organic wind capacity in the second half of FY2025, coupled with the strategic acquisition of O2 Power and the Mahanadi Thermal Plant, has begun contributing meaningfully to our earnings. These developments underscore our commitment to scaling up clean and reliable energy solutions while delivering sustainable value to stakeholders. This has resulted in the company reporting the highest-ever quarterly EBITDA of INR 3,057 crores, up by 93% year-on-year, and a record PAT of INR 743 crores, up 42% year-on-year. Before we delve into our performance, I would like to share some key developments from the sector.
The energy landscape is undergoing a strategic shift, with increasing emphasis on enhancing energy security and catering to the evolving customized requirements of distribution companies. India's total installed power generation capacity has now reached 485 GW, reflecting a strong growth trajectory. Over the past 12 months, the country has added 46 GW, with 19.9 GW added in quarter one of the current year alone. India reaches 50% clean energy capacity, achieving its Paris Agreement NDC target five years ahead of schedule, with a non-fossil fuel capacity of 243 GW. Renewable energy continues to lead this expansion, contributing 12.3 GW of the total addition during the quarter. This growth was predominantly driven by solar power, which accounted for 10.6 GW, followed by a more modest 1.6 GW from wind energy.
In terms of generation, renewable energy contributed 16% of the total electricity generated, reinforcing its growing role in India's energy mix and its importance in achieving long-term sustainability goals. FY2025 has marked an emerging trend in India's power sector dynamics, with several state distribution companies increasingly turning to competitive bidding of thermal power procurement. This trend continues in FY2026 as many states prepare for thermal power procurement to address growing urgency to secure firm power and to complement the intermittent renewable generation. In quarter one of FY2026, the country's power demand registered a year-on-year decline of 1.5%. This moderation was primarily due to a high base effect stemming from an 11% year-on-year growth in the corresponding quarter of the previous year, coupled with the early onset of monsoon, which impacted consumption patterns.
We anticipate the seasonal demand fluctuation to normalize in the coming quarters and remain structurally optimistic about strong medium-term power demand. Notably, the peak demand during the quarter reached 243 gigawatts in June 2025. The merchant market remained resilient during the quarter, averaging around INR 4.41 per unit on exchanges, despite record capacity additions and lower coal prices. The day-ahead market rates were flat quarter on quarter, while softened compared to year-on-year. In line with our strategy to ensure stable earnings, we have tied up the open capacity of our imported coal-based Vijayanagar plant, thereby significantly reducing our exposure to the merchant market for imported coal-based generation. For the quarter gone by, coal prices reduced to $90 per ton from $108 per ton. Currently, the API for coal prices are around $95, while within the domestic coal market, sufficient steps are taken to keep a robust coal supply.
Coming to company performance, I am pleased to report a strong start to FY2026, with earnings growth underpinned by the new capacity additions achieved in the second half of FY2025, which has now begun contributing meaningfully to the EBITDA. Importantly. The quality of our earnings has improved, with a large share now derived from our PPA-tied portfolio, offering enhanced long-term revenue visibility and stability. Our net debt-to-EBITDA for the operating portfolio stands at 4.7, well within our targeted range, reflecting our prudent capital allocation strategy and strong financial discipline. During the first quarter, we added a total of 1.9 GW of operational capacity, making a robust beginning to the financial fiscal year. This includes 1.3 GW of inorganic capacity through the acquisition of O2 Power and 550 MW of organic renewable energy capacity. These additions have resulted in a 71% year-on-year increase in net generation, reaching 13.5 billion units.
Generation from our tied-up portfolio rose 73% year-on-year, while short-term generation increased 58% year-on-year. Our thermal portfolio continued to perform well, achieving a healthy plant load factor of 76% during the quarter. Complementing our organic growth initiatives, we have strategically acquired O2 Power, a 4.7 GW renewable energy platform. As of now, O2 Power has an installed capacity of 1.8 GW, which is expected to scale up to 4.7 GW by June 2027, through a planned capital expenditure of INR 13,000 to 14,000 crores. Upon full build-up, the portfolio is projected to deliver a steady-state EBITDA of INR 3,750 crores, reinforcing our long-term earnings visibility. As previously highlighted, this platform benefits from high-quality off-takers, a seasoned management team, and a highly skilled workforce, aligning well with our strategic and operational priorities.
Next is the Mahanadi Thermal Plant, acquired in March 2025, operated for the full quarter and generated 2.7 billion units, accounting for 20% of the company's total generation. The plant delivered a robust EBITDA of INR 867 crores, contributing 28% to the total consolidated EBITDA, underscoring the strategic value of the acquisition. We would also like to highlight our strategic shift towards more resilient earnings within the merchant market. As part of this transition, we have successfully tied up our imported coal-based Vijayanagar plant with JSW Steel, resulting in a 92% year-on-year increase in generation to 1.4 billion units. This move significantly reduces our exposure to the merchant market volatility linked to imported coal. As of now, approximately 8% of 974 MW of our total 12.8 GW total installed capacity remains open and untied.
With only 10% of this open capacity of 974 MW based on imported coal, the remaining untied capacity comprises Uthkal 700 MW and the Mahanadi Thermal Plant at 88 MW, both domestic coal-based plants located in the coal-rich region. These assets benefit from favorable dark spreads, making them more economically viable compared to imported coal-based generation. This transformation makes a decisive shift towards a more resilient domestic coal-based open capacity, effectively reducing exposure to global coal price volatility. Consequently, the break-even price for our open thermal capacity has also declined, driven by increased reliance on domestic coal. Looking ahead, as all our under-construction capacity is backed by long-term power purchase agreements (PPAs), the share of untied or merchant market capacity in our overall portfolio is expected to continue declining, further enhancing earnings stability.
Coming to hydro generation, the generation across the country witnessed an improvement during quarter one of the current fiscal, supported by the early onset of the monsoon and improved reservoir levels. National hydro generation reached 39.5 billion units, marking a 13% year-on-year increase compared to quarter one of the previous year. At our hydro facility, which performed much better than the industry average last year during this quarter, we recorded a 4% year-on-year increase in generation, successfully meeting the design energy target for the quarter. This performance is consistent with the other hydro projects located along the Sutlej River. I would also like to take this opportunity to provide an update on a recent Supreme Court ruling concerning our hydro asset and the associated free power obligation.
Pursuant to the order and judgment of the Supreme Court, the company has started supplying free power of 18% from July 19, 2025, to the government of Himachal Pradesh. Further, the company is in discussion with the government of Himachal Pradesh on the modalities of supplying additional free power of 6% for the earlier period from September 14, 2023, till July 18 of the current year, from the available untied capacity. Turning to our under-construction portfolio, JSW Energy is currently constructing 13 GW of generation projects, all of which are fully tied up under long-term power purchase agreements. During the quarter, the company has signed. New power purchase agreements for 605 megawatts for renewable capacity, further 350 MW of FDRE, and 100 megawatts solar, along with 100 megawatts of battery energy storage PPA was signed after the quarter has ended.
I am pleased to announce a significant milestone in our renewable energy journey with the successful synchronization of the first 80 MW unit of Kutehar Hydroelectric Project, which comprises a total of three units. The COD for this unit, which has been synchronized, is expected any moment, and the balance two units of 80 megawatts each will also be synchronized and COD in the next few days only. This marks a major step for JSW Energy, as Kutehar stands among the fastest developed greenfield hydroelectric projects in the country. I also want to highlight that we are currently constructing a 20 MW floating solar plant in Karnataka at Vijayanagar, marking our first venture into floating solar technology. This project demonstrates our capability to execute innovative and forward-looking energy solutions, and we expect this 20 MW floating solar plant commissioning within the current quarter.
Coming to energy products and services, we recognize the critical role energy storage plays in integrating renewable energy. Therefore, we have expanded our locked-in energy storage capacity to 29.4 GWh. During the quarter, we have signed a power purchase agreement with UPPCL for 12 GWh of PSP project to be delivered in the next six years. We have also signed a battery energy storage agreement for 1.2 GWh of BESS. To strengthen our supply chain and enhance our products and services footprint, I am pleased to announce that we have started putting capital through strategic investments in key areas of equipment manufacturing purely to de-risk our supply chain. We are currently establishing a battery assembly plant in Pune with a rated capacity of 5 GWh per annum dedicated to supporting battery energy storage systems. We envisage an initial capital outlay of INR 165 to 180 crore range.
Additionally, we started committing capital for wind blade manufacturing facilities located in the western and southern part of India. Our investments in equipment manufacturing are expected to yield cost efficiencies, particularly in logistics due to the proximity to our power plants and also timely supplies of these critical parts. On our 3,800 tons of per annum green hydrogen project in Vijayanagar, I am happy to announce that the plant is nearing completion with trial runs currently at the advanced stage, and we are confident that this plant also will be commissioned in the current quarter only. Lastly, we are making strong progress in integrating both KSK, Mahanadi, and O2 Power into our operations. The integration is advancing smoothly and is contributing to the strengthening of our overall portfolio.
With 1.9 GW of capacity already added in Q1 FY2026, we are well positioned to achieve our target of 3 to 4 GW of capacity addition during the current fiscal. This momentum reflects our continued commitment to scaling our portfolio in alignment with the country's growing energy needs while ensuring that our growth remains sustainable and strategically balanced. Thank you. With this, now I pass on to Pritesh to talk on the financial performance for the quarter. Thank you.
Thank you very much, Sharad. A very good evening to all the participants. I'll just very quickly summarize the financial performance, and I'm sure most of you have had a chance to go through it. Net generation for the quarter was up 71% to 13.5 billion units on account of an increase in additional capacities from both inorganic as well as organic route.
Consistent with that, the revenue for the quarter went up by 78% at over INR 5,400 crores. The EBITDA increased by 93% YOY to over INR 3,000 crores for the quarter, and the cash profit after tax was up by 65% at over INR 1,580 crores. The reported profit after tax went up by 42% YOY to INR 743 crores. The key message is this: the increase in capacity addition has now started to yield output in terms of both energy generation and contributing to operating profit growth, and we would expect this trend to continue for the rest of the year. Coming to the balance sheet, the net debt at the end of the quarter stood at INR 59,300 crores. This has gone up by close to INR 15,000 crores quarter on quarter compared to March end.
This is due to a combination of A, consummation of the O2 Power platform acquisition, plus the incremental capex that was done during the quarter. While the headline leverage on a trailing 12-month basis remains close to six times net debt to EBITDA, more important is that. Sitting in the INR 59,300 crore of net debt, almost INR 12,900 crore is due to capital work in progress for under-implementation projects, which are likely to yield EBITDA and profitability over a period of time. The operating debt on the operating entities stood at about INR 46,500 crore, and the ratios are pretty comfortable there. The weighted average cost of debt, as we had guided the last time, in sync with the rate easing cycle, we have started to see the weighted average interest rate also come down. We've seen almost a 15 to 20 bps correction sequentially quarter on quarter.
As incremental facilities, the repricing dates come in subsequent quarters, we'll continue to see a downward trajectory there. The cash returns on net worth, which is adjusted for investment in JSW Steel shares, continues to maintain a healthy high teen, 19%, 20% trajectory as a litmus test of our hurdle rate of a mid-teen returns for any incremental capital allocation. Finally, one word on the receivable side. The total receivables at the end of June stood at about INR 3,700 crore. In terms of days sales outstanding, a very healthy trend. It stood at about 58 days compared to 65 days in the same quarter last year. I'll stop there, and let's open the floor for Q&A, please. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchscreen telephone.
If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Good evening, sir, and thanks for the opportunity. Congratulations on a very good quarter, especially on operating performance. My first question is on the EBITDA from Mahanadi and Mitra. Just want a clarification. Are there any one-offs in the EBITDA for Mahanadi and Mitra? There seems to be a strong growth in EBITDA for Mitra in particular and a strong EBITDA in Mahanadi in the quarter. Mohit, I'll take that. In Mitra, there is a one-off late payment surcharge.
More importantly, even if you look at the generation profile, the Mitra generation YOY has gone up by almost 16%. This is primarily because of a 23% higher wind generation there. Operating profitability is also high, but there is also a one-off late payment surcharge there. On KSK, there is actually no one-off. We just took it in the month of March, and this is about the first full quarter of performance. Of course, we still see there is room to continue to implement our efficiency enhancement initiatives that we had talked about last time. Progressively, we'll continue to see improvements in O&M cost, etc., but that will happen over a period of time. There is no one-off in KSK.
Also, Mohit, to add to what Pritesh just said regarding especially the KSK Mahanadi, maybe around the 9th or 10th of March when we acquired and we took some initiatives to improve in terms of the efficiency parameters, a lot of actions have been implemented during the quarter. The full benefit will come in the balanced part of the year. What Pritesh just said is that still there we see upside on that front when we start getting the full benefit of all the identified areas where the improvement is possible. Some partly it has been implemented. Some are still under implementation.
Understood. The second question is on the I understand that you have been approved to acquire the KSK Water Infrastructure Private Limited. Is it possible to help us understand the synergy and the price you are paying for acquiring the asset?
The synergy, Mohit, is that this is the company which supplies water to the plant, which is equally important as for the KSK Mahanadi plant. This company also, for this company also, equally the KSK Mahanadi is important. Right now, this company is supplying water and is being paid as a part of the O&M charges. It is critical for both the companies. That is the reason that we are in the process, as we have announced, to acquire and take control of this company.
Any color on the valuation, sir? Is it possible?
We are still working. At the right time, we will definitely inform.
Mohit, we will be making the suitable disclosures upon the consummation of the transaction.
Understood, sir. Thank you, Allerja. Thank you.
Thank you.
Thank you.
Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your question to two questions per participant. If you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Sumit Kishori from Axis Capital. Please go ahead.
Thank you. My compliments on a strong all-round performance. My first question is, how much organic capex has JSW incurred in Q1, and what is your target organic capex for FY26 and even FY27? Also, the second part of this question is, how much capacity is due to be commissioned in balance FY26 and FY27?
Sumit,`````````````````````````````````` I'll take it. In the first quarter, the actual capex spent in cash terms is about INR 2,400 crore for the quarter.
If you recall, we have guided for a full year capex of INR 15,000 to 18,000 crore. We stick to that. Similarly, as Sharad also reiterated in his opening remarks, over and above O2 Power's opening capacity of 1.34 GW, last quarter in the earnings call, we had guided for a 3 to 4 GW incremental capacity addition during the course of this year. Sharad just reiterated a few minutes ago that we stick with that 3 to 4 GW incremental capacity addition. This is in addition to the O2 Power opening capacity of 1.34 GW.
Yeah, exactly. That's right. That's right.
I know FY27 is still some time away, but would a similar number, given your large pipeline of under-construction projects, is that on for FY27?
In terms of PPAs? Yeah, Sumit, we have signed PPAs, and within the timelines, we will be completing that. It can be estimated.
It is a bit, will not be appropriate to give exact numbers for FY27, but it will be in line with what we are doing in the current year based on the PPA timelines. We will be delivering on time because we are known that we deliver the projects absolutely on time or before.
Sumit
you have spoken about prudent thermal expansion with the aggressive RE storage build-out in your annual report. Basically, can you give us an update on progress regarding execution plan for 1.6 GW Salboni? What has actually been deployed or planned to be deployed for 29 GW-hour storage capacity, which is tied up separately across PSH and BESS?
Yeah. See, Salboni 1.6 GW, we have already signed the PPA, and within the timeline, the land is fully now in place. That challenge, which is normally a challenge in a greenfield plant, is fully taken care of.
All the timelines, now it is basically that what we have been knowing, seeing, and reading about the supply chain constraints of BTG, that also has been taken care of. Within the timelines of the PPA, presently, the next step is that we have already applied for the environmental clearance, and it is at a very advanced stage. The things are moving as per the plan, and we don't see right now any challenges in terms of the execution in the way it has been planned.
Sumit, maybe I'll just step in there and add to what Sharad said. What happens is, particularly for greenfield thermal and greenfield pumped storage projects, which are slightly nuanced by the fact that there's a very long gestation period, on a three-monthly basis, we rarely have very significant progress to report.
It is a continuum of small progresses that will ultimately add up to that. To be very frank, the first six months basically goes in your a lot of groundwork before you can hit the construction, right? We are going through all those preparatory activities. As zero date has not commenced anywhere. As Sharad said, the bigger picture is this: that in line with the PPA timelines, we will be progressing on those.
Thank you so much.
Thank you.
Thank you. The next question is from the line of Atul Tiwari from JP Morgan. Please go ahead.
Thank you a lot, sir, and congratulations on a strong set of numbers. Beyond Salboni, 1600 MW, could you say some color on your thermal expansion plans, specifically where you might have land already available or where you have some visibility on fuel supply or some kind of visibility on PPA?
Atul, as you may recall, after our acquisition of this Mahanadi Thermal Plant, which is a 1.8 GW operational plant with the future further expansion for which balance of plant for balance 1.8 additional is fully ready, we are right now exploring for the fourth unit. We are in discussion for the commissioning of fourth unit, which is again of 600 MW, which is almost 45% work, 40 to 45% work is already completed. Right now is this, and then we will be looking for balance other two units also once we finalize in terms of the project start for this fourth unit of 600 MW.
This is apart from Salboni right now in the thermal space is what we are looking for.
Total of 1800 MW at Mahanadi Thermal Plant looks quite likely over a period of time. What about the PPAs of the same?
See, as I mentioned in my opening remark also, now with the kind of way the demand is growing and every state, like all of the major states, are now looking towards having security in terms of the round-the-clock power. We are absolutely certain a lot of states have the plans, and once we are ready, there will be opportunities for signing the PPA because of enough coal availability. A lot of states are showing interest because this is again a low-cost power for them round the clock. We don't see a challenge going forward the way thermal requirements and the demands are coming from various states.
Yeah. The Salboni BTG orders you have placed already, right? That is what you mentioned.
We are working on that, as I told you.
We are working on the supplies, and we are quite certain that will not be a challenge because we have made all the necessary arrangements for turbine generator supply and also for the boiler supply. That will not be a challenge at all for us.
Okay. Thank you. Thank you.
Thank you. The next question is from the line of Ketan Jain from Evindus Park. Please go ahead.
Thank you. Thank you. Congratulations for a very good set of numbers. Just a follow-up from the previous question the participant asked. You were speaking about the fourth unit of KSK Mahanadi. Do we have the coal secured for the rest of the three units of KSK? Or how does that coal work, coal FSA work?
See, Ketan, we have to understand that this plant is in the very, very large coal belt only.
The way the coal availability domestic is there, we don't see coal at all as a challenge because if you see what we have said when we acquired this asset, and which has contributed to our margins in quarter one, the open capacity, which was about 85 to 90 MW, which has hardly operated at a very lower level last year, we have been able to utilize the full open capacity and have been able to comfortably get the coal also for this untied capacity. Going forward, getting the coal, so many bids are coming, we don't see at all that as a challenge. We are sure that will not be a stopper in any way. It's a rich coal belt, which is there. We don't see that as a challenge.
U nderstood. The next question is on the lines of your opening remarks.
You said you had plans on BESS battery manufacturing and wind manufacturing. If you can speak a bit about that. One on batteries, isn't importing battery better for your projects? Isn't that cheaper than building a plant and assembling it over here? That is number one. Number two is on the wind manufacturing. How are you looking at after the domestic mandate which the government has given the draft circular?
Yeah. Ketan, first, coming to the battery energy storage, when we are saying the best containerized solution, this is more of an assembly plant in which the battery cell packs are coming from, are being imported, and it is being assembled here.
We have to understand that maybe the way the restrictions which are coming from not only from the Indian side, government side of imports from China, but also at the same time, the restrictions which now China has started supplying in terms of to their manufacturers for exports to India. Keeping both the things in line which we anticipated about a year back, we had been working on this project, and we are at a very advanced stage, and we are confident that we will start the trial runs in this quarter by the end of quarter two for this battery energy storage systems in Pune area where we are setting up this plant. Coming to wind turbines, what you said, wind turbine generator. One that the notification from the government which has come, we have to please note that we are completely protected from that.
The reason is that all bids which have been won by the developers, whether PPA signed or not, the import restrictions are not going to apply for those for a particular date.
Whenever this comes, this is at a draft stage, and whenever it comes, we don't see as a challenge, we are absolutely certain that will not be. More important is that for us, the WTG manufacturing is in India. Just to clarify that we have a technology license arrangement with SANY from China, and SANY is present for more than 15 years now in India in the construction equipment division, in the heavy construction equipment, where they have set up in Pune the same WTG manufacturing also, and which is already they are supplying. That is basically India.
Some of the components they are importing, but at the same time, there is a clear plan laid out of those imported parts also to be taken from India going forward. Blade is something which is for the SANY machines we are setting up ourselves. We are setting up the blade plants for two reasons, in two locations. One is western part of the country and one is southern part, where majority of our wind projects are being executed. The reasons are two, basically to de-risk our supply chain and to ensure that timely supplies of the blades are there. Second is that importing the blades contributes to a high logistic cost, so there will be more efficiency in terms of the cost in the project execution. We are going to commission the two blade plants in the current fiscal only. Both the blade manufacturing plants will be commissioned.
Understood, sir. Thank you.
Thank you. The next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead.
Yeah. Good evening, sir, and congratulations once again for a great set of numbers. I had again questions on the wind CUF of this quarter, which has jumped from 26% to 30%. It seems that there have been some factors which have been favorable for us in the wind generation, which has contributed to a large rise in the MITRA profitability. Do we take this as sustainable, or should CUF be normalized over the coming quarters? That was my first question.
Okay. Yeah. See, Rajesh, very valid. I'll just like to tell that increase from 26% to 30%. There are two reasons contributing to this.
If we compare for us, last year, the wind portfolio which we were having, operating portfolio in quarter one, the percentage of the MITRA portfolio in the overall wind portfolio was significantly more. Remember, we should know that these are old winds, old technologies, lower capacity wind turbines giving lower CUF. From 26% to 30%, in the current year, as I mentioned in my opening remarks also, the new wind capacities with these 2.7 MW, 3.3 MW, and 3.3 MW machines which we commissioned in the second half of last fiscal, which have seen the current year full season they are seeing, in the overall portfolio, they are operating maybe at 33%, 34% CUF. The mix has increased. One, the high wind speed has resulted in a better CUF. In our overall wind portfolio, percentage of more efficient machines has increased significantly.
These two are the factors which have resulted in this CUF.
Right. Fair, sir. Secondly, sir, you mentioned Mahanadi Thermal Plant. There is no one time. Earlier, we were looking at a kind of INR 2,400 crore EBITDA for the year for Mahanadi Thermal Plant, and the Q1 is more than INR 800 crore. Would you hazard a guess as to should we take a better number for the year in terms of the EBITDA, or is it going to be similar or slightly lower than INR 2,400 crore, what we had kind of looked at earlier?
See, as we have guided also, and the quarter one performance has demonstrated, you can definitely very well assume that. What is going to be the full year number.
I think one thing I'll tell you that as I said in my opening remark or maybe in one of the questions, that there was an untied capacity also, which maybe has not done or has not been used last year during the CIP process, which also has contributed significantly. The PLF at which we are operating, we continue to operate at. We expect that going forward, our PLF on an annualized basis will be more than last year. There is no reason to assume that achieving 2,400 or surpassing that will be a challenge.
Rajesh, I'd like to add to what Sharad has said. See, in the context of acquisition, you typically look at a long-term trajectory, right? You're not doing it for the next 12 months only, right? You've got to own the asset for the residual life of the asset.
If you recall what we had said the last time around is this, that this is a Section 63 competitive bid. PPA, the long-term PPA that they have. There will be a tariff trajectory which will vary from year to year, correct? When we talk about capital investments, we as strategic owners look at normalized, levelized long-term. We are a conservative company, so we talk about worst-case scenarios, right? The 2,400 has to be seen in that context, please. It was not for FY2026 guidance, right?
Right.
I hope that clarifies because the trajectory will vary year to year, but at least in no matter what happens, in any particular year, we do not see it going below 2,400, right?
Right.
If I could sneak in just one question, the net debt is INR 60,000 crore around at the end of Q1 when we're talking about INR 15,000 crore capex for the year. Is it fair to assume that the debt can go up to INR 70,000 crore before we kind of look at some kind of evening out of the debt or something like that? I mean, what is the net debt to EBITDA ratio highest that the company can go to, or what you're comfortable with?
I don't think one will be able to guide that. Rajesh, we will repeatedly come back to two things. We are conscious of the leverage. We are very conscious of where we are allocating incremental capital, and is this being allocated into cash flow generating assets where returns are more than the cost of capital.
The third thing is this, from time to time, what is the right thing to do to de-risk the capital structure and the balance sheet? We'll continue to be operating within these guardrails because one thing which is very strategic and important for us is our credit ratings, right? That is one source of competitive advantage to deliver our equity IRR, right? The cost of capital in a 3:1 debt equity project has a very high variability to that. Therefore, in an absolute way, it is an arithmetic you will be able to reach, and hopefully, there will be EBITDA generation and cash flow generation as well. It will not just be just capex, right? You will be able to do that math, but we would not want to give a specific net debt absolute number or a peak ratio number guidance out here.
Thank you.
Thank you.
The next question is from the line of Aniket Mittal from SBI Mutual Fund. Please go ahead. Yes, sir. Thank you for the opportunity. My first question was actually related to your capital allocation between renewable and coal. When you, let's say, decide to put capital within any of these space, how does your threshold equity IRR or your IRR expectations vary between the two?
Aniket, very good question. As we see, money sees no color, right? Capital doesn't care for is it CO2 emitting or non-CO2 emitting or anything else. Capital has to meet one uniform hurdle rate, which is a mid-teen equity IRR on a levered basis. Regardless of whatever project you are pursuing, the only exception to this will be, which is typically not very large sized, will be things like on the safety or environmental or regulatory, those kind of things.
Those are the only exceptions where you've got to do certain things, and you will invest that money. For capacity enhancement projects, whether it is thermal, solar, wind, hydro, whether it is battery energy storage, pumped storage, whether it is anything else, the hurdle rate is the same.
Fair, fair. The reason I ask this is because you're pointing out there is a lot of state tenders and state plans that are out there for thermal right now. Just trying to understand, as long as those threshold mid-teen equity IRRs are available or can be made, we will not be shy of putting up more thermal.
There is another limiting factor, I would say, or a boundary condition, which is also call it management bandwidth or call it execution. We can't be implementing so many greenfield projects at the same time, right? It is not just PPAs, right?
Will you have the necessary ingredients to deliver on that, whether it is land, whether it is water, whether it is evacuation, whether it is the other, or equipment? So many things go into that, right? It is not just the, "Oh, if tomorrow you have an opportunity to do 10 GW of incremental thermal just because the hurdle rates are being met." It can't be done like that, right?
Also, as we have announced, if you remember, 30 GW by 2030 in our strategy 3.0. We have been maintaining maybe for quite some time that two-thirds, one-third of green and one-third thermal. That also, in capacity terms, we will continue to maintain with 30 GW capacity. Maybe one-third, two-third thermal and renewable. There are many factors, as Pritesh said, apart from just that the requirements are coming because there are enough requirements.
The Government of India has announced the fresh additional capacity addition of 97 GW of thermal by maybe 2032 or 2033. There will be enough capacity going forward. We will be definitely looking into it. As and when we feel appropriate, we will definitely be going ahead with it.
Fair. Got that. Just one more question. When I look at the PLFs for solar during this quarter, they're down to about 21% versus 24% last year. Is this entirely related to the O2 Power acquisition, or is there something else?
Sorry, can you repeat the question, please?
When I look at the plant load factors for solar during the quarter, it's come down to about 21%, I think, versus 24% last year. Just trying to understand, is this because of the O2 Power acquisition, or are there any PLF changes in the existing portfolio?
Sure.
As we know, the early onset of monsoons and the radiation levels, when we compare in the current quarter, quarter one, as compared to last year, have been slightly on a lower side, which has resulted in lower PLF, not because of O2. Because O2 are new, more very efficient plants, not very old plants. Not because of O2. It is primarily only because of the radiation and early onset of monsoons.
Actually, just to add to what he said, when I said earlier that MITRA saw 16% higher generation, 23% higher generation wind, solar was actually minus 7%. Exactly for the reasons that Sharad mentioned, that you do early onset of monsoon and higher amount of cloud covers, etc., the solar irradiance was lower.
Got that. Yeah. That's helpful. Thank you. Those were my questions.
Thank you. The next question is from the line of Nikhil Jain from Crystal.
Please go ahead.
Hi, sir. Thank you for the opportunity. My question is regarding the Seci battery energy storage systems plant. We are awaiting the tariff approval from CERC. Are we having any guidance on the same? Related to the same capacity, you guided 60% of the contracted capacity is under INR 1,080,000 per MW per month. Is it now 100%, or is it still at 60%?
It is still at 60%. There is no change. As we have informed earlier also, there was a delay from Seci side to adopt this tariff. It is pending with Aptel, wherein the order is reserved. Maybe the next outcome we will update only once the reserved order is pronounced.
Thank you. One more question on these lines.
Given a scenario where LOAs are received from Seci, do you foresee any risk of PPA not being signed due to change in tariffs, like in this case, which we are not getting approval for?
This kind of is a more significant variation when it happens. It is a question of timing. Going forward, the way it is expected, if these kind of variations are expected, this is a very one-off unique case wherein this kind of delay in adopting the tariff and things have happened. This is a very one-off case that cannot be generalized, resulting in any challenges for the sector in general or industry developers in general. We don't see this as any challenge going forward in terms of tariff adoption or the LOAs which are getting converted into PPAs.
Okay. Thank you.
Thank you.
The next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. The first question on thermal. A lot of questions have been asked on CSK. If I look at the Section 63 tariff order, I would assume the charges and urgent capacity charges are going to decline this year. There is a steep jump in EBITDA. Mathematically, it doesn't seem that the merchant open capacity will lead to such a big swing. Within a short period of time, you've been able to improve efficiency so much. Even if you take on merchant EBITDA, the run rate still looks much higher than the 2,400 EBITDA that you're looking at. How do we look at EBITDA for CSK for maybe this year, next year?
You also, I'm not sure if I'm mistaken, but somewhere in the release, I see that you're looking to tie up some of the remaining open capacity into PPA. In your opening comments, it seems like the remaining open capacity has better cost position, domestic coal. That didn't tie up. I'm just trying to clarify. Is that what you're looking to do on the remaining untied capacity? That's on thermal.
Satyadeep, on CSK, I will come back to what I said a few minutes earlier. Tariff trajectory will follow the bid-out path. No one can do anything with that. No matter what, howsoever bad the condition is, INR 2,400 crore of EBITDA, we will always make. Upside is a function of market opportunities, efficiencies, optimum utilization of assets, etc., right? We would not be able to give a forward-looking asset-specific guidance on that.
On the second part of your question, which is on open capacity, I want to bring out one, and we've been talking about this for some time now. Two things have structurally changed. If I were to compare, let's say, at the end of March versus end of June, what has really happened to our open capacity on the thermal side, right? At the end of March, our open capacity on the thermal side was about 1,400 MW, of which about 55% was domestic coal-based and 45% was imported coal-based, primarily the Vigen and the untied capacity, right? What has changed now is this: that 1,400 has come down to about 900 MW. Within this 900 MW, 90% is now domestic coal-based because Ind-Bharat Unit 2 has come, and CSK incremental capacity has got added. Two things are happening.
We keep on repeating this, our strategic intent is to de-risk the portfolio and enhance the predictability of earning stream, right? As the incremental organic capacity addition happens, because all the incremental pipeline is 100% contracted into long-term PPA, the 8% open capacity at 12.8 GW will progressively keep on coming down because that numerator is not increasing, whereas the denominator will keep on increasing. Even within that, the quality is better because your break-even barrier is lower since bulk of that capacity is domestic coal-based instead of imported coal-based. That is the point that Sharad was trying to say in his opening remark.
I was just trying to clarify this 900 MW open capacity. There is no intent to convert that into PPA because it seemed like from the earnings release.
No, see, one thing is that, as you have said, that CSK, whatever small capacity open is there, presently, we would like to continue in the merchant, taking advantage of being in the core coal belt with low fuel cost and being in merchant with bilateral short-term trades or through exchanges. We'll continue to remain open because the plant is tied up otherwise, entire capacity. When we talk of JSW Utkal, which is 700 MW e ntirely open, and again, there also the fuel cost advantage, as and when the time develops, as and when the things move, we will take a call.
Maybe presently, we will like to continue as it is in merchant, but we will not be averse if we are assured of a good price and a medium-term or a long-term PPA with the fuel now available under Shakti and other schemes for these power supply against the PPAs, long and medium-term PPAs. We'll be open and keep evaluating the options available, saying that we will not do or we will do will not be right. As and when what we feel is the best and sustainable, we'll be taking accordingly the action. Direction will be de-risking, yes.
The second question, on the battery. You mentioned 5 GWh. It seems like, if I'm understanding it correctly, it would be a cell-to-pack conversion assembly plant, or is it you're importing electrode and then assembling into cell? I didn't understand what you're trying to do there.
No, no.
As I told you, we are going to import the cell from China, and it will be an assembly plant here. Right now, not the cell manufacturing or battery manufacturing.
Actually, we were exploring cell manufacturing also, so that,
Yeah, yeah, we continue to do that. We are in discussions with the various technology suppliers to have the right technology. We are still in discussions. As and when we reach any stage, we will definitely inform.
Just one quick question, if I can squeeze on wind. I just wanted to understand, given you're also using blades from JSW Steel and acting towers, and you have your own wind blades, so what can be the capital cost that we can look at for setting up a turnkey project for wind for JSW?
When you look at maybe newer mills versus older, how much delta could be there in P90, generally for newer mills versus MITRA? Just trying to understand how big a gap in efficiency is.
Satyadeep, I can request you to connect with the IR team for some of these discussions because a lot of theoretical things are involved in this. We would rather not make conjectures on this side. On the first part of the question that you asked, I'll come back to two things. What is the intention? The intention is to ultimately reduce your LCOE, correct? Whatever other measures to get into that, we will try and do that from time to time, right?
Fair enough. Thank you.
Thank you.
Thank you. The last question is from the line of Abhishek Khanna from Kotak Securities. Please go ahead.
Hi, sir I just wanted to check, of the 1.98 GW that you've added in the quarter, that includes 1.3 GW O2 acquired, right? Which means the organic capacity addition is about 550. Is my understanding correct? Could you just share what part of that 550 is the O2 portfolio, which was already under construction there, of the 550 incremental?
Bulk of that is actually O2 because just for the sake of fullness, O2 ended at almost 1.8 GW. Bulk of that incremental is O2.
Out of 550, 440, 450 MW is O2, and balance is our ongoing projects of JSW Neo.
Got it. Got it. When you say you're planning to add 3 to 4 GW overall capacity in the year, I assume that excludes at least 1.3, right, of O2? Or does that include that number?
Yes, yes. It excludes only 1.3. It excludes 1.3 of acquired capacity, yes.
Okay.
Just one more thing. There's a slide on the presentation which says that about 10 GW, actually 13 GW of projects are PPA-signed, of which the renewable part is about 10, 10.5 GW. Does that mean all of that has to come as per PPAs within the next two years? Is that a fair understanding? Or do some of the PPA terms extend beyond these?
Yeah, about three years. This is a right picture. At certain places, connectivity of substation, the evacuation substation is backended. Therefore, that's how it will pay off.
Okay. Let's say broadly three years as per the PPA terms is when this 10, 10.5 GW of renewable has to come?
That's a very fair assumption. Yes.
All right. Perfect. That's helpful. Thanks a lot. Just one thing maybe.
Because you said we're nearing the completion of this green hydrogen facility in the next one or two quarters, any broad sense on how the economics are for us to understand? My apologies if you've shared this before, but anything that you could share, ballpark, on the green hydrogen projects?
Yeah. See, one is that this is not one or two quarters. We are absolutely confident that in the current quarter only, this will be commissioned. The trial runs are at a very advanced stage. Second is in terms of the economics and the financials you're asking, as we have been maintaining that any investment on any project we do, the mid-teen IRR, mid to high-teen IRRs are protected, and that is what we are going to achieve here also.
This is comparatively a slightly different green hydrogen plant in which the two aspects of setting up the entire plant, the cost related to the transportation and the storage are not a part in this project because this is a co-located project for the user, and it's a direct live supply through the pipeline. This has optimized the cost and has ensured that our benchmark returns are protected.
To add further, what we have been maintaining is this: the underlying assumption is the entire cost has to be amortized over a period of seven years.
Yes. Yeah?
Operator? All right. I'll switch into something else. I would request any follow-up questions to be taken by the IR team, please.
Okay. Ladies and gentlemen, that was the last question for the contents over the management for closing comments. Over to you, sir.
Yeah. Yeah.
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In case any other questions or some of the questions we may not be able to address, request to please kindly write to our IR team. We assure you that you will get a suitable and positive response immediately. Thank you very much once again, and a very good night.
Thank you.
Thank you. On behalf of JM Financial Institutional Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.