ADANIPOWER - Adani Power Limited Share Price

Adani Power's management outlined a positive outlook driven by India's growing power demand, strategic expansions, and operational efficiency. Key points include:

Growth & Expansion: Targeting over 30 GW operational capacity by 2030, with active progress on 11.2 GW under construction (Mahan, Raipur, and Korba projects). Orders for critical equipment are secured, emphasizing timely execution.

Demand & Operations: Strong PLF (69% over 9 months) and dispatch growth (22% YoY) despite seasonal demand variability. Merchant volumes rose >50%, though tariffs dipped due to weather and market conditions.

Financial Performance: 9-month recurring revenue grew 13% YoY to Rs.41,951 crore, with EBITDA up 22% to Rs.16,478 crore. PAT stood at Rs.10,150 crore (9M) and Rs.2,940 crore (Q3). Prior-period revenue recognition reduced significantly, reflecting resolved regulatory disputes.

Strategic Initiatives: Acquired coal mines (e.g., Dhirauli) to bolster fuel security. Leveraging locational advantages and existing infrastructure for upcoming PPA bids. Actively participating in state-led power procurement schemes (e.g., SHAKTI B(iv)).

ESG & Ratings: Improved S&P Global ESG score to 68/100 (top 15% in sector), focusing on sustainability alongside growth.

Market Outlook: Expect sustained demand despite renewables, emphasizing thermal's role in baseload supply. Confident in tying new capacities to long-term PPAs as states address supply gaps. Merchant market volatility managed via contracts and operational flexibility.

Financial Strategy: Utilizing internal accruals for expansions; surplus cash to be deployed for high-return projects. No immediate need for external funding.

Challenges: Lower merchant tariffs in Q3 (Rs.4.54/unit vs Rs.6.86 YoY) impacted EBITDA, offset by volume growth. Focus remains on cost optimization and efficiency.

Management remains bullish on India's power demand trajectory, backed by economic growth, and aims to capitalize on expansion opportunities while maintaining profitability and ESG commitments.

Question: Can you provide the timelines for the 1.4 GW PPA signed with MSEDCL and the operationalization of the 1.3 GW Lanco Amarkantak project?
Answer: The 1.4 GW PPA with MSEDCL has a 42-month commissioning timeline, with internal targets to complete it in 4 years. The 1.3 GW Lanco project is expected to be operational in ~30 months. Lanco was fully acquired in Q3 FY25.

Question: What is the nature of the INR 1,400 crore one-time revenue recognized in Q3 FY25?
Answer: This includes INR 411 crore from Haryana DISCOM (coal shortfall claims), INR 422 crore from Tiroda DSM recovery, and LPS charges from Bangladesh. Haryana paid 50% (INR 782 crore) of the INR 1,908 crore claim; the rest is pending reconciliation.

Question: Despite higher volumes, why did Q3 FY25 recurring EBITDA decline 5% YoY?
Answer: Lower merchant tariffs (INR 4.54/unit vs. INR 6.86/unit YoY) and higher depreciation/finance costs from acquisitions offset volume gains. Seasonally weaker demand also impacted realizations.

Question: How will reduced technical minimum (55% to 40%) for coal plants affect operations?
Answer: Plants will operate at lower capacity during solar hours but ramp up during peak demand. Revenue depends on availability, not generation, with PPAs ensuring technical minimum adherence.

Question: What is the PPA visibility and funding plan for the 12.5 GW expansion pipeline?
Answer: BTG orders for 11.2 GW are placed. Maharashtra's 1.5 GW PPA is secured; upcoming state bids (UP, MP, Karnataka) are expected to tie up capacity. Funding will rely on internal accruals, with minimal external debt.

Question: Does solar+storage threaten thermal's role as baseload?
Answer: Thermal remains critical for baseload due to solar's intermittency. Battery storage (4"“16 hours) cannot replace 24/7 thermal, especially during prolonged low-solar periods. CEA's resource adequacy plans validate thermal's necessity.

Question: How will surplus cash from robust cash flows be utilized?
Answer: Surplus cash will fund high-return opportunities aligned with Adani's growth strategy, prioritizing value-accretive projects without compromising financial stability.