Ladies and gentlemen, good day, and welcome to the Torrent Power Limited Q4 FY25 earnings call. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Mashruwala, Executive Director and Chief Financial Officer. Thank you and over to you, sir.
Thank you so much. Good evening to all of you, and thank you for joining earnings calls of Torrent Power for Q4 FY25. First, I will take you through the performance of the quarter, after which phone lines will be open for Q&A session.
Ladies and gentlemen, please stay connected while we reconnect the management line. Ladies and gentlemen, we have the management line reconnected, so you can go ahead.
Thank you. Good evening to all of you, and thank you for joining earnings call of Torrent Power Q4 FY25. First, I will take you through the performance of the quarter, after which phone lines will be open for Q&A session. I'll explain the performance of the company at PBT level first, and then we'll take you to the tax expenses separately. Reported EBITDA for the quarter stood at INR 619 crores as compared to INR 617 crores in the corresponding quarter of last year, an increase of two crores on a reported basis. As informed in the last quarter, 420 megawatt TPL solar project got commissioned during the last quarter. The plant is under stabilization phase. It was not able to make optimum contribution to the bottom line. Hence, the consolidated EBITDA has been impacted negatively.
Considering plant running on a steady state basis, PVD for the quarter would have been higher by approximately INR 35 crores. Adjusted for the same, the adjusted PVD for the quarter stood at INR 654 crores as compared to INR 617 crores in the comparable quarter of last year. It is higher by INR 37 crores. There is a growth of about 6%. Businesses sector contributing to the performance are as follows. First, contribution from distribution business improved by INR 112 crores, mainly due to higher volumes and increase in ROE on capitalization of CapEx, solar incentive, and other O&M incentive, and true-up adjustment. Demand growth during the quarter was about 4% across all power distribution areas. Positive contribution for distribution business was partially offset by the following reasons. First, lower contribution from the merchant power and LNG sale by about INR 88 crores.
LNG price have been continued to remain elevated during the quarter, trading between $12-$17. Corresponding merchant sale remained subdued due to elevated fuel price and lower demand growth of the quarter. Third, however, the return gas price have started witnessing downward trends. Competitive gas price coupled with the NVVN tenders and better demand for projects, we expect the situation should have improved going forward. We got the LOA from NVVN for DGEN project for 1,150 megawatt and Sugen for 150 megawatt plants. The operational PPA for the NVVN tender is from 16 March to 15 October, and the specifications for the tender remains same as for the last year tenders.
Adjusted for the one-off, as explained above, profitability for the solar generation improved during the quarter by 43 crores, partly offset by the lower PLF for wind project on account of inclement weather condition having negative impact of about 30 crores. So net positive impact for the renewable is 13 crores. Moving on to the tax expenses, as informed earlier, under the notes forming part of the published accounts, there has been a decrease in tax expenses, mainly due to the reversal of deferred tax liability being one-time and non-cash items. This completes the explanation of the financial performance during the quarter. Moving into the project update, 84 megawatts out of 360 megawatts MSEDCL project was commissioned during the quarter.
The aggregate installed generation capacity of the company stood at 4.8 gigawatts as of 31 March 2025, comprising 2.7 gigawatts gas-based capacity, 1.7 gigawatts of renewable capacity, and 362 megawatts of coal-based capacity. Pipeline projects at the end of the quarter include 3.1 gigawatts renewable capacities, 3 gigawatts of pumped storage capacities, and two transmission projects at Khavda and Solapur. Further details on the transmission pipeline projects have been summarized in our latest presentation, and this presentation is available at our website. Now, I would like to take you through some of the key highlights during the year, including the financial as well as operating, as well as strategic points. First, during the year, the company made an equity raise of INR 3,500 crores through QIP, which is the first in the last three decades by the Torrent Group.
For gas-based power project, we are able to supply power in merchant market, including the NVVN tenders, and Section 11 order imposed first time on the gas-based power plant by the government, contributing significantly to the bottom line. Our distribution business continued to set new operational benchmarks with distribution loss of 2.34%. In its licensed distribution business. This achievement and one of the lowest across the country, comparable to the global benchmark. In our franchisee business area, Agra achieved its historical low AT&C losses of 6.94% compared to 58.77% when it was taken over in 2010. On strategic front, company made significant progress in building on its strategic initiative by entering into the first of its kind in India energy storage facility agreement with MSEDCL for supplying 2,000 megawatt pumped storage hydro project for 40 years.
The net debt to EBITDA, net debt to equity of 0.40, and net debt to EBITDA of 1.41 times. The company enjoys a strong balance sheet position with one of the best financial ratios among the private sector players in power sector, as well as poise for the next phase of growth. That's all for today's. I would like now to request the coordinator to open the line for Q&A session. We wish everybody to stay safe and healthy. Thank you so much. Operator, handing over to the operators.
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 touch-tone telephone. 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. Our first question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Thanks for the opportunity. So my first question is on the what were the CapEx in FY25 and the CapEx amount budgeted for FY26? And can you break up this across the businesses?
So CapEx for license distribution was about close to INR 1,300 crores for the full year. Franchisees were about INR 275 crores. Transmission was INR 250 crores. And total CapEx is about close to INR 1,900 crores. Means other than renewable CapEx, I would say. Renewable is about INR 2,500 crores.
The expected CapEx for FY26? The breakup?
Hello?
Hello.
Yes?
Yes, I'm asking for the CapEx breakup for FY26 and.
CapEx for FY26, as we explained, the distribution CapEx INR 2,000 crores, INR 1,750 for the license distribution business, and about INR 250 crores for franchise distribution business, and renewable, I think we have given the investor PPT.
Understood, sir. I think the investor PPT just mentioned the megawatt numbers, right? And the date of commissioning. Is that right?
Sorry, can you come again? Your voice is too low.
Oh, sorry. Let me allow to move to the next question, sir. I hope I'm clear now. My second question is on the NVVN contract which was signed with NVVN in the month of March. Is it take-or-pay contract, and what is the minimum guaranteed volume which you have agreed to?
So guaranteed volume is basically more or less in line with what we have done in the last year. So the specs more or less remain the same in terms of methodology.
Okay, understood, sir. And any update on the progress of 1.2 gigawatt Pumped Storage Hydro project which was signed with Maharashtra? What is the update? Have you done the financial closure? Any color on that?
It's a two gigawatt project, not 1.2.
Two gigawatts, yes, yes.
And see, it's a four, five years project. So it is currently the various statutory approvals we are doing and include the DPR also. And in the process of land acquisitions also. This is what the progress is right now.
Understood, sir.
Lots of statutory approvals we have to take. So that process is going on, plus land acquisition process is also going on.
Understood, sir. Thank you one and all, sir. Thank you.
Thank you. The next question comes from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good evening, sir. My first question is a follow-up.
Sorry to interrupt you, sir. So before you go ahead with the question, may I request you to please use your handset, sir? Your audio is slightly, there's an echo in the line, sir.
Sure. Is this better now?
Yes, sir. Please go ahead.
Yeah. Okay. So the first question is a follow-up on what Mohit asked. So there is a CapEx for renewables which is almost INR 206 billion as the expected project cost. Is this the residual amount remaining, or what is the CWIP which is already there for renewables? So what is the balanced CapEx remaining for these projects? And in terms of a rough phase-out over FY25, 26, 27, is it going to be more FY26 heavy given the timelines of commissioning are more 2026, 2027 calendar year?
Yeah. So you are right. The CapEx which we have brought out in investor presentation is the total CapEx, out of which whatever we have done is being shown in the CWIP. So balance CapEx remains, which is a significant part still remaining as far as outflow is concerned. You are right in terms of saying that 2026 would be a larger number because of a lot of commissioning being done in 2026 and 2027. So 2026 could be a larger number as far as renewable CapEx is concerned. 2027 would be lower, should be lower than that depending on how we progress in terms of commissioning of these projects.
26 will remain the heavy CapEx year as per the residual is concerned.
Yeah.
Sir, if you could help us with the CWIP number for renewables specifically, it will just help us to better understand what you have done so far.
I would say 2,500, roughly about 2,500 crores CapEx for renewables up to March 2025. Significant number of CapEx we are going to incur in the current year, FY26.
Got it. So out of 206, roughly INR 25 billion is what you have incurred so far.
Yeah, exactly.
So what has been the experience so far given power demand has been slightly depressed, fairly depressed in April, and then it's a decline in May for the first 13, 14 days. So how is your NVVN opportunity shaping out so far? Is there acceptance? I know there is a pass-through for variable cost, but given the high overall power cost, who even is buying this power? What is your experience on uptake?
They have increased the duration of the contract. Last year, it was up to June. Now they have extended it to October. So now June has started. So in fact, summer period has started. Actually, we've been impacted because of the rain and the weather factors, I would say. So hopefully now the rain is behind us. So hopefully it will start picking up. Summer will start picking up and demand will start growing, improving.
Is it reasonable to sort of gauge that April and period in May so far wouldn't have seen much offtake of this expensive power? Is that directionally a right conclusion to draw?
Yes, it is happening. During the peak period, it is happening with the NVVN tenders.
Okay, okay. And it's very clear that in the second quarter, there would be a direct benefit because this arrangement last year was only till June.
Yes, that's right. Yeah.
Yeah. So it is now it's up to October, October 15, I would say.
My last question on the UP privatization. What we are hearing is that the state will be divided into five circles for the two areas which are getting privatized. So is there any condition on how many circles one private player can take?
I think five or six circles they are talking about. It is under the means RFQ. It is a document in the preparation right now. Possibly they will invite all private sector players to participate in the tenders. More details will be there. Coming to the more details since they are holding meeting with the Ministry of Power is also getting involved in the tendering process.
Got it. But there is more chance hit ratio can be higher for more than a couple of players, given five, six circles would be there.
They will try to allocate to each of the players because ultimately you need the management benefit to handle all six circles together, so better for them also if they will try to distribute among the private players.
This will be regulated cost as ROE model just like Allahabad's model there.
Absolutely.
It's very, very attractive. Okay. And just finally, on pumped storage hydro, is there any progress in the 2-gigawatt project? I know I mean, this is but any progress that you would like to highlight?
In terms of progress, I informed earlier to the Mohit that it is under various regulatory approval processes going on. Land acquisition process is going on right now. The first stage we have to get the various approvals and land acquisition, and then construction activity and ordering will start.
Okay. Thank you so much, and wish you all the best.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. First, just another clarification question on the Pumped Storage Hydro Project. The energy storage facility agreement was signed recently as per the release. If I understand correctly, the agreement was that the capacity needs to be commissioned within 48 months of signing this agreement. So given you are in the process of land acquisition and then construction, it doesn't look like it will be commissioned within 48 months. I just wanted to understand, is that flexible, the term for commissioning which was laid out initially?
It's too early to comment on the timeline. So we are working. We know we are aware about the timeline. So we are working on the project right now on various commissioning timeline.
Fair to say the CapEx on this will not start in the next two years, the CapEx outlay?
No, sir.
In 2016, 2017?
When land acquisition will happen, which is going to happen. So we'll start committing the CapEx because the PPA is in place. So we'll start committing CapEx from the current year onward itself.
Okay. Secondly, on the NVVN tender, just more of some clarification. I know earlier questions also were asked around this line. The tender specifies 111 crunch days, and there is a minimum contract, minimum guaranteed offtake based on those crunch days. So I'm guessing it started between two months. So there would have been some crunch days in the last two months. How has been your offtake on the specified crunch days that were mentioned? So because the crunch days of 111 will be spread out across the six months if I understand correctly.
Yes, it is spread out across the six months. These are the minimum offtake. Minimum offtake they are talking about. It can be higher also.
How was it? So how many crunch days have been there so far in the last two months out of 111?
Satyadeep, it is difficult to comment on the current quarter in terms of crunch days and all. But if you look at it, April and May, April, we saw some pickup in demand. May, because of, I think, weather conditions, it has again gone down as far as demand, overall demand is concerned. But if you really look at the exchange data, there are periods where the prices are touching INR 10, which indicates that there is higher demand and lower supply. So intermittently, there has been offtake under the tender, but it would be difficult to give you exact numbers for the current quarter per se.
I will try to understand. If I look at the math, the tender specifies 2,900 MU for the entire tender and given you participated with the capacity, it looks like you have minimum guaranteed offtake of 2,300 MU over till October. But that will be based on crunch days every month. So I understand the demand has been relatively weak. If the tender as per tender, NVVN would be bound to have a minimum offtake against every crunch day, and they can't make it up later on. So just follow on. Is that the way it works? And basically, which means on every specified crunch day, they are taking the minimum guaranteed offtake. That's what I'm trying to understand.
If you look at the demand scenario, last one week was bad. Otherwise, it's basically the demand is there. Last one week, demand was weak. There is also some variability or some flexibility available for NVVN and for generators also. It is not sacrosanct or cast in stone that these days you have to pick up this much, these days you have to pick up this much. There is some flexibility under the tender, which people will utilize.
But you have a minimum guaranteed offtake of 2,300 MU. If they don't take up in one particular month or quarter, then they have to make it up till October. Is that understanding fair?
No, sir. This is for the six-month period minimum guaranteed. If they don't do it, then typically they have to pay for the fixed charges for whatever MUs they have contracted for. It's a monthly commitment. It's basically a commitment for the six months.
If they don't offtake, they don't pick up 2,300 MU, then they have to pay you a fixed charge which is mentioned in the tender.
Absolutely.
For the amount they don't pick up, and the overall return, just wanted to understand how does it stack up against. I know the pricing seemed somewhat lower compared to NVVN tender last year. How does it, I mean, if you have to look at profitability per unit, how does it stack up against Section 11 that you had or maybe the last NVVN tender for last year?
No, I think profitability, if you look at it, this year also the profitability should more or less be similar to what we have seen last year under NVVN tender. I think Section 11 may not be a good comparison of NVVN and NVVN tender. So ideally, we should compare it with the last year NVVN tender.
Isn't the pricing somewhat lower compared to NVVN tender last year? You're saying per unit profitability would be similar for you versus last year NVVN tender?
There would be slight impact, but not a major impact per se. Because there are other gains which you also make in terms of your cost of buying gas could be lower compared to what you are being paid for. So you make some money out of that also. Then there are operating expenses. So if I put all together, I think profitability from current year NVVN tender should be more or less similar to what we have seen last year with a slightly downward bias.
Okay. Just on this particular gas, only given you had Section 11 last year, you have bigger period for minimum guaranteed offtake. I mean, demand has been volatile, but the offtaker is there and is taking up power at these high prices. Generally, are you sensing some interest on some medium-term PPA given I mean, buyer is already buying this high gas prices. Is there any interest at all from some parties for medium-term PPA for gas? Or given the demand is so volatile and it's still expensive that you've not seen any interest at all?
No, I think right now we don't see any medium-term or long-term contract being offered for gas simply because you can't have control on the gas prices. So there is no pricing confirmation on the gas prices, which means the offtaker would also be open for the variability. And since demand is also very, very variable, it's difficult to do a long-term or medium-term contract right now. So that is why, in fact, if you look at the we have committed the higher capacity from the DGEN and Sugen power plant this year as compared with the last year.
Okay. Thank you, and wish you the best.
Last, it was 770 megawatts. We have just doubled it about 1,000 megawatts so we have increased our tied up a larger capacity for the NVVN tenders this year.
That is understood. The capacity is higher in the contract period, is also, which is why the minimum guaranteed offtake amount quantity is much bigger. I mean, I would believe it is 2,300 MU. Last year, I was just not able to understand if so. I think that you clarified that if demand is not there, then if they don't pick up, they have to pay that assured fixed price. Thank you so much for clarifying.
That is the contract. Minimum guaranteed, they have to honor basically. So that is assured, I would say.
Thank you.
Thank you. Our next question comes from the line of Atul Tiwari from JP Morgan. Please go ahead.
Yes, sir. Thanks a lot. So just two questions. So what is the minimum guaranteed take or pay offtake for which the fixed charges have to be paid under NVVN tender?
That we are not disclosing right now.
Okay. Okay. And generally, the second question is on this Pumped Storage Hydro Project. So just trying to understand it a little more clearly. So as per the agreement, the commissioning period is 48 months. So has that clock started or is the start of that clock contingent on first approvals being available and land being acquired?
It is started from the date of PPA signing. It has started.
Okay. So the clock has started. But the land is still under acquisition. And in many infrastructure projects, we see land acquisition can get delayed a lot. And obviously, it is not under the control of a private company. So how does it work in reality? I mean, if suppose land acquisition gets delayed by two years, then what is the remedy available to you under the PPA?
So I'll need to comment on the land acquisition because we are in the process of doing it. So we don't foresee, I would say, this is a long period will happen in acquisition of land. So I'll need to comment.
Okay, but any idea about how long land acquisition will take place? I mean, is majority of land acquired, 90% acquired, or just 20% acquired? Where we are in that spectrum?
Atul, I think there are multiple stages in when you say land acquisition, right? So we have identified the land. There are discussions going on. There are certain things which have been done. Now, it is not a binary event. It will be a stage-by-stage process. So we are fairly ahead in terms of final acquisition is concerned. But you can't say that the entire thing is being done, and there are different types of land, so I think we should be able to get the land in very short time. But as of now, if you want to say an answer to it, I think we have not got the land as of now.
Okay. And fair to assume that the financial closure will happen obviously only after land acquisition is done in the state, right? Is that a right understanding or you guys are hoping to do FC even before that?
Atul, it is. These are all simultaneous processes. Land acquisition, scouting for various construction parties in terms of, let's say, turbine suppliers, civil suppliers, financial closure. These are all parallel activities which you do when you get a project or you win a bid. So financial closure has multiple layers into it. There could be a sanction which can say that the disbursement can happen if these CPs are finalized or these CPs are done. Some part of disbursement can happen. So as far as all these different work streams are concerned, there are multiple layers into it.
Okay. Okay. Got it. Thank you. Thank you.
Thank you. Our next question comes from the line of Bharanidhar with Avendus Spark. Please go ahead.
Yeah. Am I audible and ready?
Yes.
Please go ahead.
Okay. Yeah. So I missed the first part of the opening remarks. Can you give me the merchant bid in this quarter and for the full year FY25?
Merchant, it's a lower quantity of INR 88 crores. Merchant. Negative.
Hello?
So no, I didn't understand. So you're telling it's INR 88 crores for the fourth year?
Q4 as compared to the last quarter, compared to the quarter of last year. It is lower by INR 88 crores. Okay. Last year number I have INR 85 crores. So it's basically nothing this quarter or minus three.
Yeah.
Okay. So for the full year, the merchant bid will be around INR 750 crores, INR 740 crores FY25?
Roughly that, yes.
Okay. Clarity on NVVN tender. So as per my understanding, this first quarter FY25, we benefited due to both NVVN and Section 11 opportunity. And what you are telling is now it is not Section 11, it's only NVVN tender. Is that right understanding?
As of now, yes.
Yes. As of now, yes. As of now, yes.
Okay.
Last year, sorry, this year, first quarter, the spread that we earned was around INR 4 per unit. You are telling that it might be roundabout there with the lower buyer on the spread. Is that the right understanding?
Not able to comment on this.
Okay. Other question is, how is this NVVN tender different from last year, so is there a fixed revenue?
More or less, it is on a similar line. So not much difference, I would say.
I mean, I'm not aware of how it was last year. Meaning, is there a fixed tariff or is it variable cost plus some margin?
You will get the fixed charge as per the tender. Plus, you will get some differential amount because variable cost is lower. So you'll get some margin for the variable cost also.
Okay. And how much will that fixed charge be per unit?
Sharing that number. We are not sharing that number.
Yeah. Okay. That's it from my side. All the best. Thank you.
Thank you. Our next question comes from the line of Aniket Mittal from SBI Mutual Fund. Please go ahead.
Yes, sir. Thank you for the opportunity. Just in the presentation, I see an increase in the merchant capacity that you want to build out. It's almost doubling from about 200-400 megawatts. I just want to understand the thought process on that and what sort of realizations do you expect to see on this merchant plant?
So we see lots of potential. If you look at the market also, we see lots of potential for the merchant market. And we will tie up at some point of time those open capacity. Right now, we plan to build some merchant capacity. And during the course of construction and going forward also, whenever the opportunity is available, we will tie up those capacities. And Aniket, if you see the merchant capacity which has been added right now is wind capacity. So if you really look at it, the prices have gone down in solar hours. But if you really look at it in the non-solar hours, the prices have been fairly stable or on an upward sloping curve. So these are all wind capacities which we are putting up. And as Saurabh rightly mentioned, going forward, if opportunity is available, we may tie up these capacities also.
Okay. In the medium term, did you plan to add more on merchant because you've incrementally been increasing our targets on that? Just from a portfolio level, is there a percentage mix of merchant that you're thinking?
Right now, this is what we are planning right now at this moment.
Okay. The other part was just some pump hydro to understand a bit better, let's say from a CapEx perspective. Internally, when do you think the CapEx in the pump hydro should start coming in? And let's say internally, what are your CapEx estimates specifically in the pump hydro front for FY26 and FY27?
Some CapEx will happen. We'll start incurring CapEx from the current and more from the land acquisitions and some initial payment for the equipment. I would say major CapEx will happen in the next two years, I would say.
Suppose 26, is it? 27, 28?
27, 26, 27, and 27, 28.
Okay. Fair. Fair. And just one clarification I had. So this fixed INR 37 crores of one-off in the deferred tax, has this been completely done in 4Q itself?
Yes. Q4 itself, yes.
Okay. I got that. Fair. Thank you. Those are my questions.
Thank you.
Thank you. Our next question comes from the line of Anuj Upadhyay from Investec. Please go ahead.
Yeah. Thanks for the opportunity. Sir, what will be the CapEx in the transmission segment? You mentioned for FY26. Last year, it was INR 250 crore, I guess. In the presentation, I see we are likely to commission two transmission projects amounting to roughly INR 1,200 crore plus odd in FY26. So could you give some kind of guidance on the CapEx on the transmission side for FY26?
From these two projects, we incur about INR 250 crores CapEx in FY25. And remaining majority CapEx, I would say balance from the balance CapEx would happen in the next current year, means 25, 26.
So roughly INR 900-INR 1,000 crores would be in this year. Right?
One can assume. One can assume that number.
Okay. And we are not seeing any kind of a delay or evacuation-related concern in this. It's pretty firm to get commission in the current system.
Not material, I would say.
Sorry, sir?
Not material, I would say.
Okay. Yeah, that's it, sir. Thanks for it.
Thank you. Our next question comes from the line of Gaurav Birmiwal with Axis Mutual Fund. Please go ahead.
Hello, sir. Thanks for the opportunity. Sir, a lot of opportunities are opening up on the thermal side from the state side. Are we evaluating those opportunities as well? I mean, do we want to expand on the coal side or our focus is on PSP and renewables for now?
Yeah. We are looking at both brownfield as well as greenfield also. So that is what we are evaluating. So we have not just committed anything, but yes, we are evaluating it.
Understood. Thank you.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you, everybody, for joining Torrent Power's earnings call. We wish everybody to stay safe and healthy. Thank you so much.
Thank you.
Thank you.
On behalf of Torrent Power Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you so much. Thank you.