Ladies and gentlemen, good day and welcome to the Torrent Power Limited Q1 FY 2027 Earnings Conference 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 and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Mashruwala, Executive Director and CFO. Thank you and over to you, sir.
Thank you. Good evening to all of you and thank you for joining Earnings Call of Torrent Power for Q1 FY 2027. I will first take you through the performance of the quarter, thereafter, we will welcome the question and answer. I will explain the performance of the company at PBT level first, and then we will take you through the tax expenses separately. Reported PBT for the quarter stood at INR 925 crore as compared to INR 985 crore in the corresponding quarter of last year, a reduction of INR 60 crore. PBT for the corresponding quarter of the last year includes a non-recurring loss of INR 59 crore on account of non-cash adjustment due to foreign currency fluctuations.
Adjusted for these one-off, PBT for the quarter stood at INR 925 crore as compared to INR 1,044 crore in the comparable quarter of last year, a reduction of INR 119 crore on adjusted basis. Tax expenses during the quarter has increased by 28% as compared to 25% for the corresponding quarter of last year. The increase is mainly on account of completion of tax related prior assessments under Section 80IA for some of the units. Business-wise factors contributing the performance are as follows. First, contribution from the thermal generation business remains resilient despite elevated gas price arising from ongoing geopolitical tension in Middle East and increase in O&M expenses. Adjusted for the non-recurring item in the corresponding quarter of the previous year, the business performance was lower by INR 123 crore, primarily on account of three factors.
First, despite elevated gas price during the quarter, the company maintained healthy operating margin in its merchant power operations. However, the gains from the merchant sales and LNG trading were lower by INR 87 crore. During the quarter, we have undertaken upgrade exercise to our gas-based plant to improve the plant flexibility and availability, resulting into the increase in O&M expenses by INR 51 crore. Benefit of these are being demonstrated during the quarter whereby we were able to realize better margins on merchant power sales. While some of the upgrades are implemented, others are being progressively rolled out in our gas-based unit which will help us improve our margin realization going forward.
This will also help us manage the evolving operating environment, which has significantly changed recently on back of increased renewable energy penetration, requiring our units to operate more frequently in a cyclical mode and respond to varying demand patterns. These measures are expected to support higher availabilities, improve operational reliabilities and optimization of long-term O&M costs as well as despite the increasing flexibility operating regimes. Company on 25th June 2026 consummated acquisition of Nabha Power plant which contributed INR 15 crore in the quarter. Lower contribution from our thermal generation was partly offset by increase in gain from distribution and renewable segments. The second reason on the distribution and transmission segment in total is contributed 71% additional profit driven by three factors. First, receipt of favorable orders from the regulator approving carrying costs of INR 41 crore.
This is a normal course of business due to regulatory assets we have and we are getting the favorable regulatory orders. Second, improved contribution towards the operation by INR 19 crore supported by two factors. First, increase in ROE and RoCE on account of capitalization of assets and higher rate of returns on equity as per the new tariff regulations and other incentives. The second is improved contribution from the distribution franchisee business on back of improved volumes and increased tariff. Volume across the franchisee distribution business improved by 4%. The third reason is additionally new commissioning transmission project has contributed INR 11 crore incremental profit. Now coming to the renewable operations.
We have renewable operations contributed INR 19 crore positive contributions due to generation from newly commissioned capacity and improved PLF across the wind and solar, both partially offsetted by gain in similar quarter of the previous year on account of LPS income on delayed payments. The fourth reason is other factors lowering the profitability, INR 90 crore. There are two main reasons. First, increase in the finance cost on back of higher capitalizations and retail borrowings. Second, increase in miscellaneous expenses and depreciation which was on account of higher capitalizations, mainly derived in renewable segments. This completes the explanation of the financial performance during the quarter. Now coming to the update on the various projects and the implementations.
Renewable energy project of 70 MW got commissioned during that quarter taking the aggregate installed generation capacity of the company to 6.6 GW as on 30th June 2026, comprising of 2.7 GW gas-based project, 1.8 GW coal-based project and 2.1 GW renewable capacities. First, on renewable energy projects, as on 30th June 2026, renewable energy projects of 4.6 GW are under implementation, which we expect to commission progressively as under. About 1.2 GW capacity is expected to commission in FY 2027. Between 1.4 GW-1.6 GW capacity is expected to commission in next year, which is FY 2028, and balance capacity in FY 2029. CapEx of INR 1,550 crore was incurred during the quarter against INR 1,200 crore CapEx in Q4 FY 2026 and INR 355 crore of CapEx in Q1 of FY 2026. This is comparable quarter of the last year.
Of the total CapEx of INR 29,600 crore in RE projects under implementation, cumulative CapEx of INR 8,800 crore has been incurred up to 30th June 2026. In FY 2027, total CapEx of approximately INR 10,000 crore is expected to be incurred for all RE projects. Moving on to the implementation under the Anuppur Thermal Power Project of 1.6 GW, the update is as under. First, activity are underway, wherein following major milestones have been achieved. First, power sale agreement executed with M.P. Power Management Company Limited. Second, letter of award issued to the BTG as well as balance of plant. Third, environment clearance received for the project. The fourth, the project is expected to commission in next six- seven years. A total CapEx of INR 450 crore has been incurred as on 30th June 2026.
Coming on the Pumped Storage Hydro Project of 3 GW in Maharashtra, the update is the activity are underway, wherein following major milestones have been achieved. First, energy storage facility agreement with MHESCO was executed. Letter of award issued to the civil, hydro, mechanical packages and second, electrical and mechanical packages. Environmental and forest clearance has been received for the project. The project is expected to commission in next three- four years, and total expense of INR 1,130 crore has been incurred up to 30th June 2026. In terms of transmission projects, Solapur is under implementation, expected to be commissioned this year. Cumulative CapEx of INR 330 crore has been incurred as on 30th June 2026. Further details on the pipeline projects have been summarized in our latest investor presentation available on our website.
That's all for the quarter. Now I request coordinator to open line for Q&A session. Wish everybody to stay safe and healthy. Thank you so much. Handing over to the operators.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 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. Your first question comes from the line of Mohit Kumar with ICICI Securities. Please go ahead.
Yes. Good evening, sir, and thanks for the opportunity. My question is on Nabha Power. Can you help us with the revenue adjusted EBITDA Nabha Power for Q1 and gross debt on the Torrent Power post the acquisition of Nabha?
The Q1, we acquired on the 25th of June. There is hardly five days of income we have booked, not for the entire quarter. Five days, I would say, EBITDA was about overall INR 15 crores profit we have booked in our result. Not material amount we have booked, because it is a five days operation we have consolidated in our books of accounts.
As far as gross debt is concerned, it is around INR 6,500 crores of gross debt, which is added in the books.
Because of the Nabha Power project. About INR 3,000 crores in the Nabha Power book and about INR 3,800 crores in the Torrent Power book.
Understood. Is it fair to expect that Nabha Power will add INR 250 crore EBITDA per quarter going forward?
You are right. On a steady state basis, around INR 1,000 crores of EBITDA should be a good enough number.
Yes, exactly.
Understood. My second question is.
Cash flow basis. Not on the reported because they are.
Understood. I understand, sir. The Ind AS accounting.
Cash flow is here. Not on the reported basis because reported.
Understood. Adjusted EBITDA.
Yes, adjusted EBITDA. Yes.
The second question, sir, can you help us with the reason for lower contribution to EBITDA of renewables in this quarter despite 30% increase in generation? I am talking about EBITDA, which you reported in the segmental. I see only INR 20 crore incremental.
Sir, differential, you can see this number, but if you recollect that the last year similar quarter, we have income about INR 47 crore of the LPS claim was available, which was not available in the current quarter. That is why you are seeing the differential number is lower. Otherwise, on a standalone basis, number is higher as far as EBITDA is concerned.
That is on the RE side, right, sir? RE side, you are talking about, right?
RE side. Yes, RE side, I am talking about.
Understood, sir. My last question, sir. I think we spoke about your capital expenditure program for FY 2027 is INR 10,000 crore. How much you incurred in the Q1?
Around INR 1,500 crore are incurred in Q1 for renewable projects.
Only RE projects.
For the RE projects.
For the RE project, yes. We haven't spent anything on the coal, nothing on the PSP in the Q1. That's right, sir?
Thermal, basically coal, we have incurred about INR 125 crores.
INR 125, understood. Very helpful, sir. Thank you, sir. Thank you. Best of luck, sir.
Thank you. Your next question comes from the line of Satyadeep Jain with Ambit Capital. Please go ahead.
Hi. Thank you. First of all, wanted to understand, dissect your demand across different distribution circles. While Ahmedabad you registered 10% volume growth YOY, Surat, Dadra & Nagar Haveli, all these other licenses and all had very muted growth. Just trying to understand what was happening in these regions when overall at the all-India level, we had very strong growth in the quarter. The AT&C losses also increased in all these. Almost all circles, AT&C losses increased substantially. Both demand and AT&C losses.
Ahmedabad is a benchmark. I would say 10% is a growth which is comparable with the country's average. Surat being a industrial town, always growth will be not comparable with the overall demand growth. Dadra is also industrial area, basically, it's comparable to the Surat growth. DNH&DD, there is some lower demand, is exceptional case, I would say. It's not a repetitive kind of a nature. In terms of AT&C losses, I would say in Agra particularly, the last year similar quarter, we got some good realizations from our Agra Nagar Nigam. The past realization we got, which has reduced our AT&C loss substantially, which is not the case in the current quarter. That is what the difference, I would say, in AT&C losses. Otherwise, DBTL and SFB is not material different, I would say, as compared to the last year.
There is a substantial difference in the Agra, mainly because of the higher realization we have received in the comparable quarter of last year, which is not the case in the current quarter.
Okay. What was the, I'm not sure if I missed it in the opening remarks, what was the merchant EBITDA and NNP EBITDA in this quarter?
Sir, differential lower profit is about INR 87 crore. That is what we have said. We sold about 445 MUs in the merchant market in the current quarter.
This was largely in high DAM market?
Yes.
Okay. Just trying to understand, how do you look at this market, given you have a large untied capacity and many players are adding battery, given the merchant BESS installations that we see for this year and projections, do you see a case for any risk? How do you evaluate merchant gas potential for you?
If you look at the demand pattern in the country, where the peak demand and the summer demand will always be there, now the peak demand period is also prolonging, I would say. During the evening time and the summer time, we keep on getting this opportunity in the merchant market for our mutualized capacity, entire capacity, I would say. When the gas price become normal, we will keep on getting more opportunities going forward, I would say.
Lastly, there is some delay in one FDRE project, it seems, and some other projects also, slight. I know you're talking about 1.2 GW in general for this year. Are you seeing any delays on some of these are your own DISCOMs, it seems like STU. Are you seeing some delays in STU commissioning and the latest estimate you have for 1.2 GW? What kind of visibility do you have for transmission availability?
As you aware that all these project connectivity, transmission line availability, basically, commissioning the transmission and onward transmission line is bit of a issue, and some of them because of the ROW issues. Which we are trying to work with the transmission utility to ensure, see that they should come, their project on time, so that our project progress should also align with their timeline.
Satyadeep, what we have said is after factoring in all those issues. Our expectation is that we should achieve this target, what we have given. Now, if something unfortunate happens, we'll update you on a quarterly basis. This is what we feel that is a reasonable estimate right now, looking at the current scenario.
Okay. Thank you so much.
Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Your next question comes from the line of Sumit Kishore with Axis Capital. Please go ahead.
Good evening. My first question is, in relation to your 1.2 GW peak commissioning target, what kind of phaseout are you expecting of project commissioning after 70 MW in Q1? Is it likely to be more Q3, Q4 heavy, or is there any phaseout that we should be mindful of?
We expect about, though first quarter our commissioning was 70 MW, but by Q2, we expect about 400 MW will get commissioned, and the balance will happen in H2, I would say. That is what we are progressing.
Okay. H2 will be about 800 MW peak and H1 is 400.
Yes, exactly.
Okay. We were reading in the media that your AMGEN Power Plant is supposed to be sort of shifted to another location, and in lieu of that, you'll set up a 800 MW replacement power plant. What is your version of what developments have happened so far?
AMGEN Power Plant is about 362 MW capacity, and we have a permission to ramp up to December 30. What has happened is, since after December 30, it's not going to be in operation. We have expressed this, and it's basically plant available for the Ahmedabad distribution. We were requested state government for the coal allocations, double the coal allocation of capacity of 362 MW. That coal, state government has approved the coal allocation, but they have requested the central government for the coal allocation. Once the central government approves the coal allocation for this plant, we plan to set up close to about 800 MW unit, to replace the AMGEN Power Plant. That is what the plan is.
Has the land for this plant been earmarked or allocated to you?
I think we are working out on where exactly to place the plant, it may not be in Gujarat also. We are working on that, where this new plant will come in. Work in progress kind of a thing right now, but coal allocation is being done by the state government. We applied to the central government for the allocation. Once the allocation is available, then we firm up our plan and implement one unit of 800 MW to replace the AMGEN Power Plant.
Okay. Quarter-on-quarter, we have seen some movement in your RE portfolio, mainly around C&I projects. What is your general outlook for the year in terms of how your portfolio for RE will build up? Is there any traction that you're seeing in terms of tendering activity for RE projects? Your thoughts here will help.
We are participating in almost all the projects, as you know of our philosophy, we restrict our bidding at some point of time so that we can at least achieve certain IRR. That is what the philosophy we continue to adopt going forward also. Our benchmark will be the IRR, not to acquire more and more capacity. That is our philosophy we are following, and we continue to follow that philosophy going forward.
Okay. Thank you.
Yeah.
Thank you. Participants, you may press star and then one to ask a question now. A reminder to all the participants, you may press star and then one to ask a question. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you very much, everybody, who joined the Torrent Power earning call. Thank you very much.
Sorry to interrupt. Sorry to interrupt, management. We have last-minute registrations coming.
No problem. Okay. We can continue.
Thank you. Our next question comes from Apoorva Bahadur from IIFL. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, I want to know your thoughts on a couple of things. First of all, on this increased competition from batteries. I think you touched upon this a little bit earlier as well. Where do you see the marginal cost of gas power settlement sort of heading towards, given the price at which probably batteries can supply electricity? Also secondly, I would also like to know your thoughts if we have any plans of entering the C&I space.
I think, Apoorva, there are two questions here. If you are asking the levelized cost of energy battery versus gas power plants, right? Now, with these elevated gas prices, the cost of variable cost would be higher for our LNG merchant power plants. If you look at a slightly short-term or a long-term horizon, we expect that gas prices should settle somewhere in the range of $5-$8, $6-$8 per MMBtu. Now, if that is the scenario, your variable cost could be around INR 4, INR 4.5, which is very competitive, even compared to battery also, because I think INR 2.5 of solar cost plus if you add INR 3 of battery cost, that would be INR 5.5 of battery storage solution cost.
I think we are confident enough that our gas-based power plant, particularly in merchant markets, would be highly competitive. That is the first question, if I'm not wrong. I think on the second part, if you can just reiterate, what was the second question?
Right. Second question is on your views regarding the C&I market, the corporate market. Even for your Open Gas project, is there any plan to maybe tie it up with a data center to supply sort of firm power or any of those thoughts?
Apoorva, I think, as far as gas-based power plants are concerned, with C&I segment, I think C&I segment would want renewable power. Be it on RTC or anything, they would want a renewable power. Gas may not fit into that category. As far as data centers are concerned, we are looking at those opportunities. As of now, there is nothing concrete to tell you on data centers where we can tie up our gas-based power plants. Again, data centers also are looking at more of renewable energy. Scope of that is slightly lower. Also on an economic side or commercial side, if you look at it, I cannot hedge my gas-based prices, gas prices on a long-term basis.
If I do an PPA for a long tenure with a fixed price, there is an inherent risk which I'm taking by locking in my tariff. I think as of now, in a short to medium-term, we don't see tying up gas-based power plants on a Sorry, on C&I or on a data center basis.
Sure, sir. Understood. Thanks a lot.
Thank you. The next question comes from the line of Shirom Kapur with Jefferies. Please go ahead.
Hi, sir. Thanks for the opportunity. Firstly, on your renewable segment, where a previous participant also asked about the lower EBITDA year-on-year. You mentioned that we had some favorable claims from last year that is not available this year. Could you maybe quantify how much that was for the full year, and is that going to be absent for this entirety of FY 2027? As in, is this a fair run quarterly margin rate to assume for the balance of the year? Are we going to see it reduce each quarter?
Shirom, I think we will not be able to give you guidance for the full year. If I tell you on the absolute basis, this year the profit was higher or EBITDA was higher by around INR 66 crores, which compared to previous year, there was a LPS income which was booked previous year, which is INR 46 crores. If you remove INR 46 crores, the EBITDA is higher by INR 66 crores.
Right. In the entirety of FY 2026, could you quantify how much was that LPS gain, which might be?
For the full year.
Yeah, for the full year.
For the full year, this was the number. In Q1, the LPS was INR 46 crores, and for the full year also was the same number.
Understood. Got it. Just secondly on the capacity pipeline that you shared in your presentation. For quite a few of the projects, it seems that you have maybe delayed your expectation of when the plants are going to come up. For example SECI 12, SECI 16 wind, they've been slightly extended into FY 2028 as well. Similarly, for some of your hybrid projects. Could you explain what is driving this delay in capacity addition plans? Is it maybe transmission infra? Is it any other delays, if you could explain that?
It is mainly because of transmission availability. We plan our execution based on the onwards transmission line. It coincides with the transmission line. Transmission line, basically, large things like PGCIL and other things are developing. We plan our execution in a way so that there will not be any CapEx spending not ahead of the transmission line availabilities.
Understood, sir. Just if you could share a couple of bookkeeping details here. One is, I know you said Nabha Power Plant was only operational for six days, but if you could give sort of an indicative PLF for those six days, how much that was? Just secondly, on your expenses. Basically, we're seeing your employee costs have actually come down year-on-year. Is there any reason for that, and are we expected to see employee costs further reduce year-on-year in the subsequent quarters?
About your first question about Nabha Power PLF, quarterly we achieve about 85% PLF. That is what generally the PLF level of Nabha Power was. Regarding the reduction in salary costs, is maybe a one-off item. Maybe because of the capitalization, we have capitalized more salary costs. There is no other specific reason that it is continuing to coming down.
Right, sir. Got it. Thank you so much. That's it. Thanks.
Thank you. Next question comes from the line of Atul Tiwari with JP Morgan. Please go ahead.
Yes. Thanks a lot. Sir, on the LNG availability and pricing, what is the kind of availability you are seeing? I believe you had indicated that you had contracted a few cargoes in the last call. Are they coming through, and what is the landed price currently?
Three cargoes, which was contracted for the summer meeting, summer demand was already acquired and getting used also. For the balance period, we bank on the, basically, spot cargoes. We are banking the spot cargoes. As and when the opportunity is available, we import the cargo on a spot basis. The next round was, yes, we have a contract of 10 cargoes available. Which will be at a link with the Brent rate, not at the spot price. Spot price is higher at about $20 kind of a thing. It is not affordable. We plan our purchase in a way that it is affordable to the consumer, and we can able to get better margin, basically. It's affordable in the merchant market also, so that we can have a reasonable margin available in the merchant market also.
This year, only the merchant market we are looking at. Whatever summer demand was there, we have completed. We have honored our summer demand by importing three cargoes.
Atul, as far as availability is concerned, there is no issue of availability. It is a question of what price those cargoes are available. If required, we can import as many cargoes as you want, but the issue is of the price. We keep on looking at what is the demand and what is the price which can be absorbed under our PPAs and under the merchant market.
Okay, sir. Sir, what are the CapEx in the first quarter? I missed that number. I think you said it.
About total CapEx is about INR 2,300 crores, all put together.
Okay.
Out of which, renewable is INR 1,550 crores, thermal CapEx is INR 125 crores, transmission about INR 120 crores, and light distribution is about INR 500 crores.
Okay. Thanks, sir.
Thank you. The next question comes from the line of Harsh Singh with Sameeksha Capital. Please go ahead.
Right. Thank you for taking my question. Just one thing, sir. With respect to the franchise distribution business, is there anything we see on the pipeline in terms of new franchise and dynamic-
No, voice is not audible. Your voice is not audible.
I'm audible now?
Yeah, you can go ahead.
It is still the same. If I can request you to use the handset, please.
Yes, exactly. It's all echo is coming.
Am audible now?
Yes.
Yes, sir. This is much better.
Understood. Thank you for taking my question. Just one thing. On the franchisee distribution side, is there anything in the pipeline in terms of any new franchisees, let's say, UP that you could partner with? Anything that you could provide there in terms of items?
I think UP will come post-election only. They have attempted to do it before election, but I think considering the agitations and all those things, I think it is going to come post-UP election. As you know, it is a state subject. Nothing is there, but we expect something will come possibly in the state of Maharashtra. Otherwise, there is no concrete things I would say in the franchisee side right now.
Understood. Thank you, sir. No other questions from my side.
Thank you. The next question comes from the line of Vishal with PL Capital. Please go ahead.
Yes, sir. Thanks for the opportunity. I think this could be linked with the previous, one of the question a participant asked. DGEN plant that is on imported LNG, and in this quarter, we also reported a PLF. Though it's a lower PLF, but we are able to generate and sell power. At a $20 MMBtu, are there still buyers, takers, that's why there's a PLF? Or cargo we are getting at a lower rate, and that's why we're able to sell. Just to get a perspective on that.
If you look at $20, your variable cost will be about INR 13, kind of a thing. Though it's very difficult, I would say, but since we have our old cargoes available, we are able to buy at a competitive rate in bits and pockets, I would say, which will help us in targeting the merchant market, peak demand period kind of a thing. Basically, summer demand and peak demand kind of market. We are able to sell at a much higher rate and earn our contribution on those market. $20 is quite challenging, I would say, at this rate.
Sir, I think we should just add, at $20, you can sell it high in the market, not in the regular market, which is capped at INR 10. We have been selling in the Day-Ahead Market, and we have been getting better realization. This is doable because we have made a lot of flexibilization in our plants, where in frequent start and stops can be done, and can be run on cyclical basis. Our variable cost would be higher, but at $20, we are able to serve the Day-Ahead Market, but they will not give you an opportunity to work at a very high PLFs. This is around two, three hours of every day, two, three hours you can get that pricing.
In certain slots also, not on a continuous two, three hours basis. It's very challenging, $20 to sell power at a $20 MMBtu is quite challenging, I would say.
Okay. The cargoes that you have mentioned, at what rate we are able to get it? Are we exhausted or probably, still it's there, and then we can have still maybe mid-teens sort of PLF in quarter two and three going forward also?
Cargoes was mainly for our distribution business, so for meeting the summer demand. Though any opportunity is available, we keep on buying in a small lot, not in a big cargo, full cargo kind of a quantity.
Okay. Sure, sir. I think that's all from my side. Thank you.
Thank you. A reminder to all the participants, you may press star and then one to ask a question. 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 earnings call. Stay safe and healthy. Thank you so much.
Thank you. On behalf of Torrent Power Limited, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines. Thank you.