Ladies and gentlemen, good day, and welcome to Adani Power Limited Q1 FY twenty-five results earnings conference call, hosted by ICICI Securities. As a reminder, all participant lines will be in the 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.
Thank you, Sagar. Good evening. On behalf of ICICI Securities, we are pleased to welcome you all to the Q1 FY twenty-five earnings call for Adani Power Limited. Today, we have with us the management team, represented by Mr. S.B. Khyalia, CEO, Mr. Dilip Jha, CFO, and Mr. Nishit Dave, AVP, Investor Relations. We'll start with brief opening remarks, which will be followed by Q&A. Over to you, sir.
Good afternoon, friends. Welcome to the earnings call for first quarter of twenty-four, twenty-five. I have with me our CFO, Mr. Dilip Jha, and the APL finance team. Adani Power Limited continues to grow from strength to strength, driven by a vibrant core market, operating excellence, and an agile and capable team. The Indian economy is hungry for more power, and the nation is blessed with most of the resources required to fulfill its needs. During the recently concluded quarter, APL posted a sharp year-on-year growth in PLF to 78% and greater power dispatch across all plants, aggregating to 26 billion units. APL's power dispatch under PPA improved because of growing power demand, lower prices of imported coal, and competitive positioning merit order stack. Our strategically located open capacities also benefited greatly from high merchant demand and tariffs due to our competent fuel management and logistic capability.
Our O&M excellence allowed us to fully capitalize on the peak demand opportunity by ensuring high plant uptimes. As you all would be aware, we have now achieved almost full resolution of regulatory petitions related to domestic coal shortfall claims and recovered past dues from DISCOMs. Consequently, one-time revenue reconciliation of the prior period items has come down significantly, and our revenues as well as operating profit primarily reflect now ongoing business. Our constant endeavor to optimize fuel cost and to improve contribution per unit show has borne fruit in the form of a sharp growth of 53% in continuing EBITDA. At the same time, our pragmatic management of cash flows and leverage has allowed us to bring down the finance cost. Consequently, profit before tax has nearly doubled during the quarter one of 2025 on a recurring basis.
As you can see, APL has opened its fiscal year twenty-four, twenty-five on a very strong note, and we are confident of continuing to perform with all-round excellence on the path ahead. Speaking of the future, the Mahan Energy Phase II ultra-supercritical expansion project of 1,600-megawatt capacity is well underway to achieve its targeted completion by June twenty-seven. The outlook for India's thermal power capacity growth is very favorable. The government has revised its power demand projection within just two years. It estimates that peak demand will grow from 250 GW currently to 400 GW by 2031-32. This will call for 80-90 GW of additional thermal power capacity to meet peak demand, even if the target of 500 GW of non-fossil fuel-based capacity is achieved.
State governments have already started to call for bids for supply of firm power under long-term PPAs to meet power demand five to six years from now. Bids for supply of 6,400 megawatts from thermal power have already been invited by three states, while more bids are expected from other states, too. We have started to take proactive steps for capacity expansion in view of this positive outlook and our long-term goals. We have started advanced preparation for setting up three more projects of 1,600 megawatt each at Raipur, Raigarh, and Mirzapur. The Raipur and Raigarh projects are expansion of the existing power plants in Chhattisgarh, while the Mirzapur project in UP will be set up in a subsidiary company that we have acquired recently.
We are awaiting NCLT approval of the resolution plans for Lanco Amarkantak and Coastal Energy, which will expand our operating capacity by 1800 megawatts and add another 1320 megawatts of under construction capacity. In addition to this, we are also evaluating further brownfield expansion projects of 4800 megawatts and inorganic opportunities of more than 1000 megawatts, which together will take our target capacities to 30.67 gigawatts by 2030. We are following an agile business model and integrated approach for augmenting assurances on project execution and operational fronts. We are also focusing on enhancing fuel security through commercial mining licenses under an asset-light model. We are highly confident of delivering value-equity investments to our stakeholders by capitalizing on our core strength. I would like now to invite Mr. Dilip Jha, CFO, to speak about the financial results, followed by a question and answer session. Thank you, and over to you, Dilip.
Thank you, Khyalia, sir. Good afternoon, friends. I hope you all have downloaded the regional presentation that we have uploaded in the website. Adani Power Limited has delivered yet another quarter with a strong financial performance, with higher volumes and revenues, improved profitability, and very healthy credit indicators. The company achieved excellent PLF of 78% and sales volume of 24 billion units in Q1 FY 2024-25. In comparison, it had posted 60% PLF and 17.5 billion units sales volume in quarter one, FY 2023-24. Almost all power plants contributed a higher PLF and volumes on back of higher power demand under PPAs and in the merchant market. The second 800 MW unit of Godda Power Plant was commissioned at the end of June last year, due to which the effective operating capacity was lower in Q1 FY 2024.
In the recently concluded quarter, full generating capacity of Godda was available, which was contributed to higher volume. Continuing operating revenue for Q1 FY 2025 grew by 29% to INR 14,717 crores, as compared to INR 11,370 crores in Q1 FY 2024. Continuing total revenue grew by 30% to INR 50,052 crores in Q1 FY 2025, as compared to INR 11,612 crores in Q1 FY 2024. Import coal price for Q1 FY 2025 were lower as compared to Q1 of last year. Due to this, tariff realization in some PPAs with pass-through of import coal prices was slightly lower. At the same time, merchant tariff realization was strong in Q1 FY 2025 and resulted in higher contribution.
This reduction in import fuel price was also reflected in the significantly lower growth in fuel cost for Q1 FY 2025, which was 17%. As a result, continuing EBITDA for the quarter grew by a strong 57% to INR 6,290 crores, as compared to INR 4,121 crores in Q1 last year. During Q1 FY 2025, APL recognized a comparatively much smaller amount of INR 422 crores as one-time period, prior period revenue on account of regulatory order, as compared to INR 6,497 crores in Q1 last year. The reported revenue and EBITDA now reflect the quarter's performance to a great extent, providing adequate clarity into the numbers. Further, as highlighted by our CEO, Mr.
Khyalia, earlier, we have been able to keep finance costs firmly under control with the stated aim of reducing leverage. We have utilized regulatory cash flows to prepay debt during the previous financial year, making the balance sheet very healthy, improving our credit ratings to AA stable, and helping reduce interest rates. Finance cost for Q1 FY 2025 was INR 811 crores, as compared to INR 883 crores in Q1 FY 2024. On the other hand, depreciation was higher at INR 996 crores versus INR 935 crores in the two quarters, respectively, due to the commissioning of Godda plant.
This outstanding operating performance and cost control led to continuing profit before tax for Q1 FY 2025, nearly doubling to INR 4,483 crores versus INR 2,303 crores in Q1 FY 2024. After considering one-time item, the reported profit before tax for Q1 FY 2025 was INR 4,906 crores, as compared to INR 8,800 crores for Q1 FY 2024, due to one-time regulatory income of more than INR 6,000 crores in Q1 last year. The company has recognized tax charge of INR 993 crores on consolidated basis during Q1 2025, as compared to INR 40 crores in Q1 last year.
This tax includes both current and deferred tax for the Godda plant and deferred tax for APL Additional on NT. For Q1 FY 2025, profit after tax is INR 3,912 crore as compared to PAT of INR 8,759 crore for Q1 2024, and I explained that this is due to one time past regulatory income recognition in last year, which was approximately more than INR 6,000 crore. APL has now formally established its credentials as a dynamic and profitable leading power producer with high liquidity and excellent creditworthiness. It is poised squarely to convert the upcoming growth opportunity into profitable and secure investment that generate value for all stakeholders.
In the coming quarters and years, we hope to share more exciting developments and a strong performance with you on a consistent basis, and hope to engage you closely in discussions about our process. I would now like to request the moderator to open the floor for question and answer. Thank you. Thanks a lot.
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 their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Uma Menon from Bernstein. Please go ahead. Ms. Menon, your line is unmuted. Please proceed with your question.
Hi. Thank you for the opportunity. I just had a couple of questions. The first one being, if you could please provide an update on the completion of acquisition timeline on Lanco Amarkantak, and if there are any updates on, other acquisitions plans such as, KSK Mahanadi, and the Coastal Energen plants. Thank you.
Thank you for your question. Both the inorganic acquisitions of Lanco and Coastal, the awards are reserved, and we're expecting that the results will be announced very soon. We are waiting for the result.
Yes.
The other part which you have asked is KSK Mahanadi. KSK Mahanadi is under bid, and its submission is probably today by end of business hours. So it is still under bid.
Oh, sure, sir. Thank you. And the second question is around batteries. You know, with the lowering costs that we're seeing on batteries and the low tariffs that we saw, slightly lower than before, tariffs seen in on the SECI tenders recently, do you see these as a threat to the merchant thermal portfolio?
See, whether it is renewable or whether it is battery, they would be available during the daytime because battery is yet not really competitive as compared to the thermal. Any rates related to solar, they would be available during the daytime, and during daytime, we don't consider that going forward, we will have PLF more than, let's say, 55-60%. With that understanding only are all projections and investment decisions being taken. However, this solar power would be available only for 7-8 hours, and rest of the 16 hours, the base load would be made from the thermal only.
If we take full load during 16 hours and, let's say, 55% during eight hours, still the PLF would be above 70%, which is, which is very, very good PLF for a thermal station.
All right, sir. Thank you. Thank you so much. That's it.
Thank you. The next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead.
Thank you, sir. Sir, I had a couple of questions. C an you just elaborate upon how are we looking on tying up for PPA for organic expansion? W hich states have come out with tenders and what will be the duration of this PPA?
As we stated, three states are already there with their bids. Maharashtra, 1600 megawatt thermal, UP, 1600 megawatt thermal, and Rajasthan 3200 megawatt thermal. T hese three states are already there for totaling to 6400 megawatt. And many other states, as per the resource adequacy report of the Central Electricity Authority, many of the states are having deficit. And there is an advisory obviously to all the states that they have to ensure resource adequacy, because going forward, it would be obligation and obligatory on the utilities to ensure twenty-four by seven supply. W e expect a lot of such bids and tenders will come. And therefore, whatever inorganic or organic expansion which we have planned, we are of the view that we could be in a position to tie up the long-term PPAs.
These PPAs of these three states, which, I mentioned, are having a duration of twenty-five years.
Understood. S ir, for the plants which are considering for acquisition, can you speak on how much of the capacity is tied up already, and is there any merchant capacity available?
In case of Coastal, NCLT has reserved the order. NCLT has reserved order actually for both, the Coastal as well as the Lanco Amarkantak. In case of Coastal, one unit of 600 megawatts is tied up under the PPA with the Tamil Nadu, and one unit is available under merchant. And in case of Lanco Amarkantak, the entire 600 megawatts is tied up under the PPA. And 1,320 megawatts, which is under construction, and the construction is almost 70% complete. That is open, available for, we can use as merchant or we can tie up with the states against their bids. So it is available free capacity.
Understood, sir. S ir, almost 22% of the revenues are come from merchant, so how much was the merchant sale in units, if you can give? Y ou can also talk about the spreads, how much spread or cross spreads have we earned on it, and what was it compared to last year?
Actually, merchant, we have the revenue realization is INR 0.0745 on an average for the quarter.
Okay.
The cost was INR 2.89 paise, so there was a contribution of INR 4.66 paise.
INR 4.66, okay. And what was it compared to last year, sir?
Last year, the tariff was 7.57, so it was almost same. C oal cost was higher because of the higher coal cost of imported coal, as well as in the auction also, the premiums were very high because of less availability of coal. Whereas this year, the availability of coal from even Coal India under the auction is also very comfortable, and therefore, in the auction, the premium has gone down. L ast year, the coal cost was actually on higher side. It was 3.86, and therefore, the contribution was 3.71, as against the contribution of 4.56 this year. Contribution has gone up almost by INR 0.85.
Understood, sir. M ostly the sales will be in medium-term or short-term PPAs or bilateral trade, but bilateral market?
It's mostly bilateral, less than one year.
Okay.
Then some balance capacity, which because you cannot tie up 100% u nder the short-term PPAs, where you have the obligation of take or pay. E ven from that capacity, which is available for merchant, and 20-30% is kept for the exchange rate also 70%-80% is tied up for less than a year under the bilateral agreements, and balance is sold through the power exchange.
Understood, sir. Understood. Thank you, and I'll leave the question.
Thank you.
Thank you. A reminder to all the participants, you may press Star and one to ask a question. The next question is from the line of Puneet from HSBC. Please go ahead.
Thank you for the opportunity. My first question is on your thoughts on the merchant power. Would you want to keep, you know, any more capacity open for merchant, or would you rather tie it up with PPAs, given the current marketplace situation?
We are, as per our internal assessment, we are keeping around 20% under merchant. That should be, a balancing act, whereby, we don't want to expose us, for market risk more than the 20%. and 20%, is sufficient, to take the advantage of higher rates from the market. W e are of the view that we should keep around this only 80-20, 80%, 20% ratio.
Even for the expansion, you would like to keep 20% merchant?
For expansion also, we would like to tie up through the long-term PPAs, and only 10%-20% capacity we will keep for the merchant.
Just to interject here, Puneet here. Actually, see the capacities that we are acquiring is, you know, under the NCLT route and others. Those do not have full tariffs, but they are actually located very advantageously close to all the coal mining areas. T hose capacities are well suited for the merchant market. While the newer capacities that we are going to set up, the brownfield, greenfield expansion, so therefore, those we will look at full tariffs under PPA.
A vailability of credit, is there credit available for the merchant part of the capacity as well? Or do you have to fund it out of your internal accruals?
Credit is available nowadays even for merchant also, because there is a clear indication from Government of India that since now the rates in the market are quite attractive, and therefore, the financial institutions and banks would look into the standalone viability of the capacity. Now, since the market, merchant market is quite mature, so it is available and the institution and bank are open to look into the merchant capacity. In case of, let's say, our Mahan power project, we have tied up capacity of 1,320 MW out of 1,600 MW. P artial capacity is already considered by the financial institutions for funding, though it is under the merchant capacity.
Understood. That's very helpful. And secondly, in your, you know, analysis, how are you protecting yourself against potential future carbon taxes? Do the PPAs have a clause which allow you a pass-through, or is that a risk that you'll be exposed to later on?
See, any carbon tax would be obviously, would be a change in law, and therefore it would be passed through under the PPA. In fact, you may be aware that, already we are having INR 400 per metric ton, which was called initially as, green cess, and then-
Yeah.
It was named as nowadays the GST compensation cess. T he objective was to call it as a green cess and to use for those type of objectives. And that green cess, when it was imposed, it was imposed initially INR 50, then it was next INR 100, and ultimately today it is INR 400. And it is allowed as pass-through under the PPA. So similar thing, if anything further is imposed related to carbon tax or any tax, it will get passed through under the PPA.
Understood. C an you also talk about the future acquisition opportunities apart from the KSK and Lanco? What other could you be evaluating or is available in the market?
Puneet, obviously, we cannot give you names of these targets, but we are evaluating the opportunities as they come, you know, as we come across them. W e look at certain criteria for selecting and, you know, going through the evaluation process before we bid for them. F or example, the quality of the equipment, how well the plant has been maintained, how well endowed it is in terms of key enablers like water availability, transmission availability, whether it is close to coal bearing sites, whether it has got room for expansion. So those things are taken into consideration first, and only then do we decide if we want to bid for a specific project.
Without naming any intent on the size, because I would presume those would come in faster and greenfield will still take about five years to come from now.
Yeah. A ctually, you know, so there are ongoing evaluations and bidding is also going on, as we also mentioned earlier. W e will look at good projects over there. P rimarily, inorganic expansion is not really the key strategy that we are following. It is actually to get access to good sites, get access to capacities that can be turned around quickly and fulfill the demand niche that we find in the market.
See, the company has good cash flow, so whatever opportunity will be available which fits into our objective, obviously we would be looking into that. W hatever will come and available, we would be looking into that.
Okay. That's ready. Thank you so much and all good day.
Thank you. Participants, you may press Star and one to ask a question. The next question is from the line of Bharat Shah, from ASK Investment Managers Limited. Please go ahead.
Hi. The merchant power offers flexibility and promise of a higher reward, but of course, there is certain risk, especially in a leveraged business. While the PPAs give us predictability but probably will lock us down into relatively a potential of lower returns. How do we policy-wise, what is our philosophy and strategy to balance risk and reward between merchant and the PPAs? Mm-hmm.
I think I have already answered this question earlier, but nevertheless, for the sake of repetition, I would like to say that we have internal a strategy whereby we want to tie up 80% of the capacity through long-term PPAs, which will give us stable returnsm 20% we are keeping open, whereby we can optimize our returns by taking the advantage of good returns in the market. T hat is the broad strategy.
Okay. Sorry, I missed that earlier part. My apologies.
Yeah.
Secondly, likely, given the way the economy is growing and, given the way it is a synergistic growth across many, many sectors, therefore the, GDP growth is likely to be far more, burgeoning type and combining amongst many sectors. Plus, given the first of, growth on manufacturing and industry, energy demand growth, we are likely to overshoot all projections. G iven 11-12%, likely electricity demand and the growth, in the coming period on a per annum basis, what our growth, the picture would show? Will it be, what multiple do we see compared to overall energy demand growth in the system?
In my opening remarks, I have already stated that in last two years, the Government of India has changed its estimates. Now the Government of India is of the view that by 2031, the peak demand would be 400 gigawatts. Out of 400 gigawatts, around 300 gigawatts is to be met from the thermal capacity. Today, we have 217 gigawatts. Out of 217 gigawatts, around, let us say, 10 gigawatts will be scrapped because of the aging. About 80-90 gigawatts additional capacity would be required in next 5-6 years. There are obviously very less number of developers now available in this country.
We have already stated that we have very good response and plan, whereby today we have 15 gigawatt capacity, and we are planning to achieve by 2029, 2030, at least 30 gigawatt. That is at least 30 gigawatt. It all depends on how the future demand will come up. W e will try to match our growth plans with the demand growth. And obviously, we are very bullish because not only that, it will help us in absorbing our additional capacities, but obviously we are of the view that there would be good rates available. O ur realization should go up apart from growth in terms of quantum.
In volume terms, probably will grow at the rate of 15% over 5-6 years. I thought it was, in my earlier discussions with you, my impression was at a rate higher than that is what volume growth we are aiming at.
Bharat ji, I'm sorry, your voice wasn't very clear. Can you please repeat what you said?
I'm saying in my earlier discussions with you, my impression has been that we are aiming at volume growth much higher than what Dilipji is just now mentioning. T his will imply about 15% volume growth over the next five, six years. I thought we are looking at achieving a much better number than that.
I think we gave the same number. We have never given in terms of capacity numbers more than this. This is our announced and notified capacity to exchange also and to everybody. We have given the same number, that we are going to have capacity about 30 gigawatt, as in today's 15 gigawatt.
Okay. Maybe then I've been more optimistic than what has been suggested. Therefore, revenues are likely to be growing at a rate faster since realizations will probably improve.
That would be obvious, because as I stated that if the economy is going to grow faster and the demand is going to be higher, in that case, the rate realization would be much higher. O ur growth in terms of revenue would be, one, because of the doubling of the capacity, and the second would be because of the higher rate realization. T here would be combination of these two.
By implication, profit growth would be even much higher because of the basic equation underlying that.
Right. Okay, thank you.
Thank you.
Thank you. A reminder to all the participants, if you wish to register for a question, please press star and one on your touchtone phone. Participants, you may press star and one to ask a question. The next question is from the line of Raghav, who is an individual investor. Please go ahead.
Hi, good evening, everyone. M y question is regarding green ammonia blending project at Mundra site. W ould like to know about the outcome of that and future prospects in terms of raw material and raw material cost, if we implement further that green ammonia. That will be, I think, also beneficial for our greenhouse, that our reducing carbon footprint.
We are carrying out the pilot study. First, we have to establish whether the green ammonia can be co-fired with the coal or not. We are in the state of technical study at this stage. Once the technical possibility is established, then we have to see on the part of the viability of the rates of the ammonia, and also whether that would be available as pass-through under the provisions of PPA. It has to be seen from multiple angles. One is the technical feasibility, second is the market rates of ammonia, and whether the power generated based on that will be allowed as pass-through under the provisions of PPA. If all things go on the expected lines and the rates are viable, obviously we'll go ahead with that.
At this stage, we are in the technical feasibility study stage, so would it be difficult to give the future roadmap? W e are trying to make it feasible so that we can reduce our carbon footprint.
Thank you so much.
Thank you. The next question is from the line of Lakdeep, who is an individual investor. Please go ahead.
Good evening. What is the future of the electricity supply to Bangladesh, and how the payment situation is right now with the Bangladesh?
We have signed the agreement for 1600 megawatt and the PPA is for 25 years. O bviously, the PPA will last for 25 years, so there's no question about future as regards to the already concluded agreement. As regards to payment is concerned, we have started getting good payment from last few months, and every process is well established now. And on an average, 4 to 5 months of arrears is there for all the power suppliers of Bangladesh. I t is not that we are getting some different treatment. We are going to get the same treatment, which used to be, which is the similar situation in India also.
The way we get the payment in India from the DISCOMs, similarly we are getting the payments from Bangladesh also, with some timeline, obviously, because these are government utilities, so there are obviously would be outstanding to their suppliers. A s per the process, we are getting now the regular payments.
Are we expecting any increase in supplies to Bangladesh?
No increase. We have fully tied up our power project, so the entire power is going to Bangladesh. It is a dedicated power station to Bangladesh. It's not even connected with the Indian grid. E verything is going to Bangladesh, and Bangladesh is taking full power.
Okay, thank you.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you. Thanks, everyone. Thanks a lot. It was really, you know, a very interactive session. And if still anyone wants any, you know, further clarification or any query, please feel free to approach us. And this is, Ravi is always there and thank you. Thanks a lot again. See you soon in next quarter. Thank you.
Thank you.
Thank you, everybody.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your line.