Adani Power Ltd (NSE: ADANIPOWER) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Dilip Kumar Jha — Chief Financial Officer
Unidentified Speaker
Analysts:
Mohit Kumar — Analyst
Nikhil Abhyankar — Analyst
Abhinav Nalawade — Analyst
Nirav Shah — Analyst
Yash Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Adani Power Limited Q2 FY ’25 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions]
I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.
Mohit Kumar — Analyst
Thank you. Good evening. On behalf of ICICI Securities, we are pleased to welcome you all to the Q2 FY ’25 earnings call for Adani Power Limited. Today, we have with us the management team, represented by Mr. Dilip Jha, CFO; and Mr. Nishit Dave, EVP, Investor Relations. We will start with brief opening remarks, which will be followed by Q&A. Over to you, sir.
Dilip Kumar Jha — Chief Financial Officer
Thank you. Thank you, Mohit. Thank you, friends. Good evening to everyone. So with me — our Investor Relations Head, Mr. Nishit Dave; FMC [Phonetic] Head, Mr. Rajiv Rustagi; and our Treasury Head, Mr. Sunil Tokarawat and Finance Team are with me. Our CEO, Mr. S.B. Khyalia, is unable to join today, and he has sent his regards and hello to all of you.
Again, thank you for joining us today to discuss our financial results for the second quarter of FY ’25. I am pleased to report that Adani Power has delivered yet another strong quarter, demonstrating our commitment to growth and operational excellence. Adani Power has embarked on the next phase of its growth journey. We are swiftly achieving capacity expansion milestones and securing power supply agreements to ensure long-term revenue stability.
We have recently acquired and added 2,300 megawatt of capacity, taking our operational capacity to 17,550 megawatts at the end of September 2024. These additions include 500 megawatts from Adani Dahanu Thermal Power Station, 600 megawatts from Lanco Amarkantak Power Limited, and 1,200 megawatts from Coastal Energen Private Limited. We are fully committed to turning around stressed power plants rapidly by utilizing our core competencies and strengths.
We have also received a letter of award from the Maharashtra DISCOM for the supply of 1,496 megawatt power on net basis under a 25-year power supply agreement. This power will supply from a new 1,600 megawatt ultra supercritical thermal power project to be set up in Chhattisgarh. With these, we now have long-term tie-ups for 3 gigawatt capacity out of our targeted organic capacity addition of 12.5 gigawatts.
The Indian power sector has scaled new peaks with electricity demand growing at a fast pace. Peak power demand, which was 203 gigawatt in FY ’22, is already at 249 gigawatt now. The government estimates that it will reach 296 gigawatt by FY ’27 and 388 gigawatt by FY ’32. This has prompted the government to raise its targeted thermal power capacity addition requirement to 80 gigawatt by FY ’32.
Energy demand is also growing rapidly, and the importance of thermal power for providing base load and peak power supply and balancing the grid is increasing. This is prompting the DISCOMs to float bid for supply of thermal power on a long-term basis. Merchant tariffs are also high despite the reduction in import fuel prices and easier domestic coal availability. In this scenario, Adani Power is ideally placed to benefit from growth in both long-term and short-term market.
Now, coming to our performance in the recently concluded quarter, onetime price period — so, for the first half of FY ’25, our power sales volume was 46 billion units, a 29.2% increase from 35.6 billion units in H1 FY ’24. Our continuing total revenue for H1 FY ’25, excluding onetime price period items, was INR28,517 crore, a 20% increase from INR23,767 crore in H1 FY ’24. This revenue includes one month performance of Moxie Power Generation Limited, which amalgamated with Coastal Energen, and Korba Power Limited, originally known as Lanco Amarkantak, which was acquired in the month of August and September 2024, respectively, under IBC.
Our consolidated power sales volume for quarter two FY ’25 was 21.9 billion units, a 21% increase from 18.1 billion units in quarter two FY ’24. This growth was driven by imported power demand, lower import coal prices and higher operating capacity. Our total continuing revenue for Q2 FY ’25 increased by 10.8% to INR13,465 crore compared to rupees INR12,155 crore in quarter two FY ’24. This growth was primarily due to higher sales volume, tempered by lower tariff realization on account of fuel price reduction.
Our continuing EBITDA for H1 FY ’25 grew by 38.3% to INR11,692 crore, up from INR8,457 crore in H1 FY ’24. Similarly, continuing EBITDA for quarter two FY ’25 grew by 24.6% to INR5,402 crore, up from INR4,336 crore in quarter two FY ’24. This increase was due to higher continuing revenues and lower fuel and operating costs.
We have utilized the proceeds for regulatory recovery judiciously to deleverage and to fund capex. As a result, the debt per megawatt has come down significantly, and our credit rating has improved further. In this quarter, CARE Ratings has assigned AA stable rating to APL’s debt facilities in August 2024.
We have been able to exert strict control over finance costs, which were lower at INR1,618 crore in H1 [Phonetic] FY ’25, as compared to INR1,772 crore in H1 FY ’24. Similarly, the finance costs for quarter two FY ’25 were INR807 crores [Phonetic], as compared to INR888 crore in quarter two FY ’24.
Our continuing profit before tax for H1 FY ’25 increased by 69% to INR8,020 crore compared to INR4,746 crore in H1 of previous year. Continuing profit before tax for quarter two FY ’25 saw a significant rise of 44.8%, reaching to INR3,537 crore compared to INR2,443 crore in quarter two of the previous year. This was a result of improved EBITDA and lower finance costs.
Onetime prior period revenue recognition on account of regulatory orders was INR1,200 crore in H1 ’25 which was lower in compared to INR9,278 crore in H1 of the same — of the previous year. This is because we have already recovered most of the past regulatory dues in the previous year. Our tariffs now incorporate recovery of alternate fuel costs on an ongoing basis. Similar to H1, the onetime prior period revenue recognition in quarter two FY ’25 was also lower at INR598 crore, as compared to rupees INR2,781 crore for quarter two FY ’24.
Consequently, the reported profit before tax for H1 ’25 was lower by 35.5% at INR9,040 crore as compared to INR14,023 crore for H1 of the previous year. Similarly, the reported PBT for quarter two FY ’25 was lower by 20.9% at INR4,134 crore, as compared to INR5,224 crore for quarter two of the previous year. However, as you would appreciate, we have posted a very strong financial performance on a recurring basis, and these reductions, which is optical, is due to last year nonrecurring onetime income of the past regulatory issues.
During H1 FY ’24, we had recognized deferred tax credit of INR1,330 crore. In comparison, we have recognized total tax charge of INR1,829 crore for H1 ’25. Similarly, the tax charge for quarter two FY ’25 is INR837 crore, as compared to deferred tax credit of INR1,371 crore for quarter two of the previous year. As a result, the profit after tax for H1 FY ’25 is INR7,210 crore, as compared to INR15,350 crore — INR15,354 crore for H1 FY ’24, and INR3,298 crore for quarter two FY ’25 as compared to INR6,594 crore for quarter two of the previous year, and this is mainly due to the last year onetime nonrecurring income, which reported during the last financial year, as I’ve already explained.
Our diverse capabilities and financial resilience provide a solid foundation for growth in our quest to reach 30-plus gigawatt of capacity by FY ’30. Our existing operations will generate sufficient cash flow to enable us to reach our targets without excessive leverage. We will follow a debt-light strategy to fund capital expenditure, relying on our strong cash flow generation to achieve our long-term target.
We have given advanced orders to main plant supplier for 11.2 gigawatt of capacity, which will be commissioned in a phase-wise manner by FY30. Of these, a 1,600 megawatt ultra supercritical expansion project is already under execution at Mahan Energen site in Singrauli, Madhya Pradesh. The advanced ordering done by us will help us de-risk our project execution by ensuring timely availability of the most critical equipment.
Looking ahead, we remain committed to leveraging our inherent strength and competitive advantages to drive growth and deliver value to our stakeholders. Our operational excellence and financial discipline will continue to drive our performance and credit — create long-term value for our shareholders.
Thank you for your continued support. I look forward to your questions. Over to you, moderator. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Nikhil Abhyankar from UTI Mutual Funds. Please go ahead.
Nikhil Abhyankar
Thank you. Sir, my first question is regarding the receivables at Godda. So can you quantify what are the receivables as of September 30?
Dilip Kumar Jha
Yes. So, as on September 30, 2024, our receivable is, in Indian rupees, INR6,630 crore. And if you will ask in terms of millions, it’s $790 million. So this is the receivable outstanding as on 30th September.
Nikhil Abhyankar
And sir, how much did we build in the last six months?
Dilip Kumar Jha
Last six months, we have received almost $350 million.
Nikhil Abhyankar
$350 million. Okay. And sir, we understand that the Godda plant is not connected to the domestic grid. So, are we looking to link it with the domestic grid in the medium term?
Unidentified Speaker
We will explore options. As of now, there is no issue related to the power plant, power supply being provided to Bangladesh. We are very much in touch with the grid operators over there. We are in sync with the Bangladesh grid, and we are supplying power according to their demand. We are also receiving payments from them. There had been a little bit of a disruption earlier, but they have built up the payments gradually. And we are hoping that we will see an improvement and gradual clearance of the outstanding receivables over the next six months or so. So, as of now, we hope that there will be no further deterioration in terms of the outstanding. And as of now, we don’t think that we need to look at that option. But if required, we can consider it.
Nikhil Abhyankar
Sure. And sir, the second question is regarding Coastal Energen. We acquired it in Q2, and we are holding 49%. So will we look to increase the state over here? And also there is an under-construction capacity of around 1,200 megawatt. Are we looking to commission that under-construction capacity as well? And if you can give us some guidance on the capex as well.
Unidentified Speaker
Yes. Actually, there is no under-construction capacity in case of Coastal. It was actually in Lanco Amarkantak, where they were adding 1,320 megawatts, 2 X 660 megawatts.
Nikhil Abhyankar
Okay. So over here, there is no capacity addition in Coastal?
Dilip Kumar Jha
No capacity extension in Coastal as of now.
Nikhil Abhyankar
And for Lanco, sir?
Dilip Kumar Jha
Yes. Lanco, as we have said, that 1,320 megawatts is under construction, and this capacity expansion will be over and above the existing operational capacity of 600 gigawatts — 600 megawatts.
Nikhil Abhyankar
Okay. And sir, what will be the timelines for the commissioning of this additional capacity?
Dilip Kumar Jha
So this, we are expecting that in next two years, it will be ready.
Nikhil Abhyankar
In next two years. Okay. And sir, Reliance has taken a stake in Mahan 1 and I guess Mahan 2 as well. So what are the exact details? How much have they tied up and how much have they paid for the 26% stake?
Dilip Kumar Jha
This is from Mahan Phase II — this is our Mahan Phase I. And the total percentage, if you will ask, so this is 5.6% almost in the equity. And in terms of its — the megawatt capacity, it will be out of Unit I, it will be almost 26%.
Nikhil Abhyankar
Out of Unit I, 26%. And sir, final question, what were the merchant value — volumes in Q2 and average realizations?
Dilip Kumar Jha
Yes. So merchant volume we sold is 4,886 million unit. And my realization is almost INR6 per unit.
Unidentified Speaker
One thing I’d like to clarify, Nikhil, is when we say merchant, it’s not entirely only in the stock exchanges — sorry, the power exchanges. We sell about two-thirds to 80% of the power under the bilateral contract, short-term bilateral contracts where the buyers are typically various DISCOMs. So you will see that the tariffs that we realize are generally higher than the average rate you’ve seen on the power exchange.
Nikhil Abhyankar
Sure. That’s all from my side, sir. Thank you, and all the best.
Dilip Kumar Jha
Thank you.
Operator
Thank you. The next question is from the line of Abhinav Nalawade from ICICI Securities. Please go ahead.
Abhinav Nalawade
Yes. So, thank you for the opportunity. So, continuing on one of the questions that Nikhil asked, can you throw that light on timelines for all the upcoming projects? Hello?
Dilip Kumar Jha
Yes, just hold on.
Abhinav Nalawade
Hello?
Dilip Kumar Jha
Yes, Abhinav, just a second. Yes. So, as you know that we are in the process of several expansions, and mainly this is an organic expansion we are expecting. So let’s take Mahan Phase II. This is on full stream, and we are expecting that by December 26 and June 27, so it will be operational. For rest of the projects like, so far — so other projects, these are going on like in the Raipur, Raigarh, Kawai, Mahan and the new site Mirzapur, these are — have already started. The work in Raipur and Raigarh has started. And rest of the projects, so this is yet to start. But one thing that for all the units, we have given order for supply of BTG to be cleared [Phonetic].
Abhinav Nalawade
Okay. And so, what is the timeline for the Rajasthan bidding and any other tender that is expected to open?
Dilip Kumar Jha
Sorry, your voice is some — some [Indecipherable].
Abhinav Nalawade
Now, is it better?
Dilip Kumar Jha
Little bit better.
Abhinav Nalawade
Okay. So, I was asking that what is the timeline for the Rajasthan bidding? And any other bidding is going to come up anytime soon?
Dilip Kumar Jha
I think the latest news that in the Rajasthan bidding for PPA, I think, they have — they are reconsidering this bidding. And if any new development will come, definitely we’ll come back.
Unidentified Speaker
They’ve withdrawn the bid temporarily. Probably we’ll see the bid to be refloated soon with some changed conditions.
Abhinav Nalawade
Okay. So, one last question. What is the overdue amount with the Bangladesh PPA, and what is the receivable period as of today?
Dilip Kumar Jha
So, as I already said, the receivable is $790 million. And in rupees terms, this is INR6,630 crores. And in last six months, we have received almost $350 million. And if you see, in October itself, we have received $86 million. So the payment has already significantly increased after this turmoil in that country. So in September, we have received almost $55 million, $60 million. And then, in October, we have already received $86 million. So the payments have geared up significantly after that turmoil in that country.
Operator
Mr. Abhinav, does that answer your question?
Abhinav Nalawade
Yes. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Nirav Shah from GeeCee Holdings. Please go ahead.
Nirav Shah
Yes. Good afternoon, sir. Just one question. So what’s the reason for the increase in the capital work in progress? It’s now above INR9,000 crores. So there is an increase of that much amount in the first half. If you can just explain that please, that would be great.
Dilip Kumar Jha
So if I am — if I understood correctly, you want to know the capital working in progress or Lanco?
Nirav Shah
No, sir, for the consol entity.
Dilip Kumar Jha
Yes. So actually, Nirav, this increase is because we have acquired the Lanco Amarkantak, which has a project under construction right now. And there is a difference between the acquisition value and the carrying value of the capital work in progress. And we believe that when we complete the project, actually the overall project cost would be comparable to the current cost of setting up a similar capacity. So, on that basis, we have recognized, on one side, a capital reserve. Similarly, it’s also there in case of Coastal Energen. So, partially some capital reserve has been recognized in that case also. And specifically in case of Lanco Amarkantak, the carrying value of the capital work in progress is reflected.
Nirav Shah
Got it. And sir, just last question [Technical Issues] current plan, how much do we expect to spend in FY ’25 and ’26?
Unidentified Speaker
Sorry, Nirav, can you repeat that? We lost you in between.
Nirav Shah
Sure, sir. So what’s the capex outgo expected for this year and next year?
Dilip Kumar Jha
Hold on. So, Nirav, for this year, what we are expecting that, apart from acquisition, so what we have already acquired, and if you will have some good acquisitions basis, our own internal benchmark, then our ongoing projects and then for our organic expansion, it will be near about INR6,000 crore. And for next year, we are expecting that, for same project, it will be around INR20,000 crore. As of now, this is our estimation.
Nirav Shah
Got it, sir. Perfect. Thanks a lot, sir, and all the best.
Dilip Kumar Jha
Thank you.
Operator
Thank you. The next question is from the line of Yash Agarwal from JM Financial. Please go ahead.
Yash Agarwal
Yes. Sir, what is the EBITDA in the first one from the acquired entity that you have posted in the second quarter from Amarkantak, as well as Coastal Energen [Phonetic]? What is the amount of EBITDA?
Unidentified Speaker
Yes. It’s only one month for which we have done the accounting. So it’s not a very large number, [Indecipherable] provide total.
Dilip Kumar Jha
So, for one month, this is not significant. But for the sake of giving the number, EBITDA for Coastal, we have in the number of negative INR35 crore for one month.
Yash Agarwal
And for the other one, Amarkantak?
Dilip Kumar Jha
This has been [Phonetic] INR8 crore.
Unidentified Speaker
These are very small numbers. So, yes, actually, these were companies that were under the control of the resolution professionals in the last few years. And now, our job is to actually turn their fortunes around. So we would be using our capabilities in plant operation and maintenance, in fuel management and logistics, and in power sales management to improve their efficiency, to improve their overall operating efficiency, financial efficiency, bring down their fuel costs and logistics cost also by optimizing their fuel procurement, actually focusing a lot on their fuel logistics because ultimately, we have found that there are avenues where we can make substantial improvements over there, and then managing their power sales.
Dilip Kumar Jha
Also — so what we are expecting that next year, the EBITDA for this Lanco, you can [Indecipherable] it will be near about — it will be much more an improved version because, as we have a track record of past acquisitions, we have our own system and processes there. We do lots of inefficiency. So the number what is being reported in the public and the number what we will report, you will see a tremendous change after coming to our fleet.
Yash Agarwal
Got it. And so, what is the amount of debt which is consolidated on account of these two entities in the second quarter — at the end of September?
Dilip Kumar Jha
So, we have paid INR4,101 crores in case of Lanco. And for Coastal, we have paid INR3,336 crores, and this is gross.
Unidentified Speaker
So this is the acquisition cost that we have paid. Now actually, we have taken some debt on the balance sheet of Lanco. Now, we call it Korba Power. So, we have INR1,800 crores of debt over there. The other amounts that Mr. Jha quoted were actually paid from our accruals. So the net addition of debt — the total edition of debt rather is only INR1,800 crores.
Yash Agarwal
Okay. Got it. And just to reconfirm, so you said that Bangladesh dues is about $750 million, and $86 million you’ve received in October. Is that right?
Dilip Kumar Jha
Yes, correct.
Yash Agarwal
Okay. Thank you so much.
Dilip Kumar Jha
Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Dilip Kumar Jha
Yes, thank you. Thanks a lot for your time, and looking forward to connect with you again in our quarter three earnings. Thank you. Thanks a lot. Happy Diwali to all of you.
Operator
[Operator Closing Remarks]