Torrent Power Limited (NSE: TORNTPOWER) Q3 2025 Earnings Call dated Feb. 04, 2025
Corporate Participants:
Saurabh Mashruwala — Chief Financial Officer
Rishi Shah — GM (Finance)
Jayprakash Khanwani — AGM (Finance)
Analysts:
Gaurav Birmiwal — Analyst
Swati Jhunjhunwala — Analyst
Anuj Upadhyay — Analyst
Mohit Kumar — Analyst
Satyadeep Jain — Analyst
Bharani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Torrent Power Limited. 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 zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Saurabh, CFO and Executive Director. Thank you, and over to you, sir.
Saurabh Mashruwala — Chief Financial Officer
Thank you so much. Good evening to all of you and thank you for joining Torrent Power earning call for Q3 FY ’25. First, I will take you through the performance of the quarter, after which phone lines will be opened for Q&A session.
Let’s performance of the company at PBT level first and then we’ll take you through the tax separately. The full-year PBT for the quarter stood at INR630 crores as compared with INR513 crores in the corresponding quarter of last year, an increase about INR117 crores, which is a growth of about 20% on a reported basis. EBITD for the current quarter includes non-recurring credit of about INR77 crores on account of sale of investment of cable businesses.
Adjusted for the above non-recurring item, adjusted PBD for the quarter stood at INR553 crores as compared to INR513 crores in comparable quarter of last year is higher by INR40 crores, a growth of about 8% the business that contribute to the performance of performance are as follows. There are four contributions. There are four factors which is impacting the performance. First, contribution from the thermal generation business increased about INR17 crores, mainly on account of higher contribution of the sale of merchant power and LNG by INR37 crores.
The cold-weather condition compared to the corresponding quarter last year impacted demand, which was higher by approximately 4% in the current quarter. The second item, non-cash adjustment on account of foreign-exchange variation is about INR330 crores. Second, contribution for distribution business improved by about INR40 crores mainly due to higher volumes, increase in ROE and capitalization of capex as well as solar and other O&M incentives. Three, contribution from renewable generation increased by about INR18 crores on account of lower PLF, mainly from the existing wind power projects due to lower wind speed; and lower contribution from the capacity of 300 megawatt renewal plant commissioned during the quarter. Fourth, balance debution is on account of other income, finance costs and depreciation. This completes the explanation of the financial performance during the quarter.
Moving onto the project update. First, 300 megawatt solar project got fully commissioned during the quarter. The aggregate commissioning generation capacity of the company stood at 4.7 gigawatt as on 31st December 2024, comprising of 2.7 gigawatt gas-based project, 1.7 gigawatts renewable capacity and 62 megawatt gold-based capacities. Pipeline project as at the end-of-the quarter includes three gigawatt of renewal energy renewable energy project to pump storage project to transmission project at as well as. Further details on the pipeline project have been summarized in our latest investor presentation available on the website.
Moving on to the new ventures, company green hydrogen blending with the CNG in UP, one of the largest private sector blending project in India is commissioned and under trial runs. Yes, well, for the quarter, now request co-leader to open the line for Q&A session. We wish available to stay safe and healthy. Thank you. Handy over to the operators.
Questions and Answers:
Operator
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 your touchstone 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. Again, if you wish to register for a question please press star and 1 on your touchstone phone our first question comes from Gaurav from Axis Mutual Funds. Please go-ahead.
Gaurav Birmiwal
Thank you for giving me the opportunity. Can you just explain this other income increase? I’m sure you partly explained it in your opening remarks, but just my benefits from INR53 crores last year to INR170 crores this year, how do we achieve this?
Saurabh Mashruwala
So the other income went up by from about INR53 crores to INR172 crores basically because of two reasons. One is, as we explained that the onetime gain of cable sale of investment of cable division of about INR77 crores is one of the contributor to the increase in other income and the balance is because of higher treasury income which we have booked during the course of quarter.
Gaurav Birmiwal
Understood. Thank you.
Operator
Thank you. Our next question comes from Swathi Junjanwala from JM Financial PMS. Please go-ahead.
Swati Jhunjhunwala
Yeah. Thanks for taking my question. Sir, if I look at your segmental performance, your generation revenues have gone down 10%, but the EBITDA have gone up 30%. So what is the reason for both the fall in revenue as well as fall in revenue, I can understand could be because of lower PLS. But what is the reason for this higher EBIT that you have reported, if you could highlight?
Saurabh Mashruwala
The generation — renewable generation or thermal generation you are talking about.
Swati Jhunjhunwala
Sir, just the thermal generation that is INR1,400 crores in Q3 revenue
Saurabh Mashruwala
INR1,400 crores in Q3 and as compared with the last quarter of INR1,590 crores, that is what you are saying, right?
Swati Jhunjhunwala
That’s right.
Saurabh Mashruwala
Yeah. So generation basically linked with the my fuel prices and what fuel prices I have contracted based on the debt generation will come. But yes, in terms of annuals, it was lower, but my — see there are generation — there are two contributors, one is the merchant sale as well as LNG sale, which has improved the performance of the thermal generation business for the current quarter as compared to the last comparable quarter.
Swati Jhunjhunwala
Understood. But sir, merchants wouldn’t it be lower? I’m assuming given that DJen this time was at a similar TLF of 4%, which is minimal. So wouldn’t merchants in any way be lower during the quarter?
Saurabh Mashruwala
But in — Suzan, we can able to sell not from — see, we are selling merchant power from — not only from the DJN also, but from the Susan also we are able to sell. So both has contributed a higher contribution EBIT, I would say as compared to the last quarter, both merchant sale as well as we all — we are able to sell LNG also during the course of current quarter.
Swati Jhunjhunwala
Understood. And can you highlight any reason why this EBIT is higher at INR300 crores versus INR228 crores in Q3 FY ’24.
Saurabh Mashruwala
So that is what I’m saying. See, it’s a higher small sale as well as LNG sale plus we also book some foreign-exchange gain also during the course of current quarter. These are the three reasons through which our thermal generation properties EBITDA is higher.
Swati Jhunjhunwala
Understood. And sir, can you highlight the capex that you have done in nine months or in generation versus TMV versus the renewables exactly?
Saurabh Mashruwala
Yeah. So nine months capex, can I give the cumulative number of nine months or the quarter?
Swati Jhunjhunwala
The nine months work, sir.
Saurabh Mashruwala
Nine months the license distribution, we are able to incur capex about INR915 crores. Franchisee is about INR176 crores. Transmission capex is INR138 crores. So about INR300 crores capex, INR1,250 crores capex we have incurred in the license franchise as a transmission business. For nine months this is Nine-Month number.
Swati Jhunjhunwala
And what would be that for renewable? Any CapEx in renewable
Saurabh Mashruwala
Was about INR1,300 crores for the Nine-Month number.
Swati Jhunjhunwala
Understood. And sir, if you highlight any capex guidance for next year, what you’re planning to do on in-license versus franchise versus
Saurabh Mashruwala
We mentioned for the next year also, about INR2,000 crores to license less franchisee out to be about INR250 crores will have the franchisee and about INR1750 crores for the license distribution business. That is what we maintain the same guideline for the next year also.
Swati Jhunjhunwala
Sure. And renewable and transmission, any guidance for that, sir?
Saurabh Mashruwala
It’s difficult for renewable and transmission, but as per the milestone of the project, capex will be incurred for the renewal as well as transmission project.
Swati Jhunjhunwala
Sure, all right. Thanks. I’ll come back-in the queue.
Operator
Thank you. The next question comes from from Investec. Please go-ahead.
Anuj Upadhyay
Yeah, hi. Thanks for the opportunity. Sir, you mentioned apart from the merchants you also did LNG trading. How much income we have that?
Saurabh Mashruwala
We’re not able to share the breakup, but these are the LNG sale merchant as well as some forex gain. These are the three contributor for the improvement in the generation profit, thermal generation profit.
Anuj Upadhyay
Okay. So it wasn’t a significant one. It wasn’t a significant one. Like total was around INR17 crores through the merchant and LNG and other all put together would be.
Saurabh Mashruwala
So see last quarter about INR228 crores, this quarter about INR300 crore, but 75% — INR75 increases there. This is mainly coming from these three factors, merchant LNG as well as some forex gains.
Anuj Upadhyay
Okay. And any update on the Section 11 for gas-based station, sir or assumption how things going to play-out in the current fiscal or
Saurabh Mashruwala
The government has started working on it. So they have started working on meeting the summer demand. So they will — we hopefully come out with the guidelines about the perio demand as well as Section 11. It’s too early to talk about it because we are in the month of February, starting February. But we — they have started discussion with the various generators about the dimitting demand as well as Section 11. So — and both are based on the fuel cost available at that point of time. So we are hoping the same kind of a scheme will be available for the summer period also.
Anuj Upadhyay
Okay. And any pipeline of the project commissioning for ’26, ’27 would be helpful for us.
Saurabh Mashruwala
So Anuj, I think if you refer our investor presentation, we have — we have broadly given the commissioning pipe timelines for all the projects for the renewable generation.
Anuj Upadhyay
Okay, fine. And lastly on the PSP side, we get mentioned in the presentation that 8 gigawatt of what we have signed. So these are all form projects where we alloy everything has been done.
Saurabh Mashruwala
The 38 gigawatt is not signed, 2 gigawatt is signed, two how the 8 gigawatt side is available with us. If we have identified the project, but out of which two weeks we have PPA we have signed. Yes, PSC we are referring.
Anuj Upadhyay
Got it. Got it. So LO has been done over there.
Saurabh Mashruwala
LOA, we have received another facilities agreement also we have signed for the 2 gigawatt, MSCDCL.
Anuj Upadhyay
Great, sir. And lastly, it’s a very poor small project, which is an air power, which we intend to go-ahead with the — for a merchant basis. I just want to understand how the financial measure can happen on a merchant basis? Is it through the completely internal funding or we are also seeking some debt funding through external?
Saurabh Mashruwala
No, no, we will try to do 70 30-day equity ratio funding. So — but it’s a merchant projects and market, you know the merchant market is very good, but even for renewable project also because so we will do the mix of debt and equity this merchant projects.
Anuj Upadhyay
Okay. But there is no concerns or restriction as such from the banking — from financial institution to lend even if the project is on a merchant basis.
Saurabh Mashruwala
I don’t think so, Anuj. I think if you look at the consolidated balance sheet, we have a very strong consolid balance sheet. Bankers typically look at various ways of comfort which a corporate can provide to land for a particular project. So there are various ways and means to fund this. We can borrow in torrent power level and use it for this project or we can borrow in the subsidiary itself by giving some comfort from the parent. So basically bankers will look at some sort of security. You are right that since it’s a merchant power PPA is not there, bankers will have some apprehensions. But which can be mitigated through these avenues. So we’ll provide the comfort from the torrent power and we’ll either be borrow direct in torrent power or we’ll provide some comfort and do the funding. It’s not a big challenge, I would say, it’s not a challenge, I would say, which can be — and project profile is good, merchant tariff is also good, so should not be a problem in funding the project.
Anuj Upadhyay
That’s helpful, sir. And lastly, if you can throw us an update on the panel licensing or the upcoming opportunity in UP, any view from your side would be helpful, sir.
Saurabh Mashruwala
So UP government has scattered the process. So obviously we will be the — we are the key players in UP when we we have presence with Agra. So we are very keen to participate in the process. So we are awaiting the process to be launched by the UP government. We have started the process.
Anuj Upadhyay
Okay, that’s it, sir. Thank you and miss you good luck. Thank you.
Operator
Thank you. The next question comes from Mohit Kumar from ICICI Securities. Please go-ahead.
Mohit Kumar
Yeah. Thanks for the opportunity, sir. The first question is on the — on the — can you — is it possible to help us with the revenues, EBITDA and PAT for Torrent Gain Energy Limited for the nine months?
Saurabh Mashruwala
And Torrent
Mohit Kumar
Green Energy, I think that’s the new entity which you formed, right?
Saurabh Mashruwala
So Mohit, as of now, Torrent Green Energy does not have any operations. We are in the process of transferring the businesses from Torrent power to Torrent Green, which is yet to take effect. So as of now, there are no operations there.
Mohit Kumar
Understood. Understood.
Saurabh Mashruwala
When you look at it, you got to look at a consolidated picture, consolid pictures numbers segment-wise numbers we have given terms of generation and renewables also. So it don’t change any numbers won’t change on a consolidated basis, whether it is a part of Torrent Power or Torrent Green
Mohit Kumar
Understood. My second question on the franchisee, you have mentioned that the VND franchisee agreement is extendable up to five years. Is there any such option available in Agra.
Saurabh Mashruwala
Agra, no such option because it is up to 2030 is currently it is available. So at appropriate time, we should initiate the discussion because if you look at the latest development in UP, your government is very keen to privatize the discom. So considering those factors and having strong presence in Agra, we’ll discuss at 20 — around 2030 for the further extension.
Mohit Kumar
Understood. My last question on the — on the PSP. Of course, you won the PSP. I think it has been now five, six months you’ve signed the PPA. Have you started the construction or if you’ve not, when are looking to start the construction of our EPC contract?
Saurabh Mashruwala
Sure see the — in case of PSP project, generally 1.5 years is required for the approval, you do your DPR and all those things, you would mobilize the sites and everything. So post one and a half years, the construction activity will start. So currently we are in the phase of getting approvals, getting DPR prepayers and being waited by the Ministry of Environment and Forest. Those processes is going on right now.
Mohit Kumar
So what is the timeline under the PPA, which we should start supplying power.
Saurabh Mashruwala
So it’s a four-year PDF, it’s after four years from the signing of the PPA. We have to start supplying the power.
Mohit Kumar
Understood, sir. Thank you and all the best, sir.
Operator
Thank you. Next question comes from Jain from Ambit Capital. Please go-ahead.
Satyadeep Jain
Hi, thank you. Just wanted to understand the use of proceeds from the QIP. If I look at the capex you’ve outlined for RE of about INR19,000 crores, when we look at discom capex also that you mentioned in the transmission the annual capex given the equity contribution is typically say, 25% 30% seems to be — you seem to have enough internal cash to be able to fund these projects, what is the intent use of funds for the QYP? That’s the first question.
Saurabh Mashruwala
Sorry.
Satyadeep Jain
What’s the intended use of funds from QYP?
Saurabh Mashruwala
As per the — as per the document which we have filed, filed PPD document we have filed and submitted. So INR3,500 crores QRP out with 25% is for general corporate purpose and 75% for the repayments of debt. So currently, we are prepaying the debt and once we — and you know the internal approvals are there, once we need the money for the funding of this upcoming project of RE and PSE, we’ll raise the debt also at that point of time. So currently, we have used the QIT proceed 75% for the prepayment of the debt and we have reduced the debt.
Satyadeep Jain
Just wanted to understand from capital allocation perspective, Torrent is already — compared to a lot of other peers under the balance sheet was already well-managed and you look at-equity contributions for future projects. If you put up more equity, it hurts the IRR. Are you looking at lower debt contribution in future projects in order to maybe have more safety cushion or what the entire use you saying is for 75 is for prepaying the existing debt. You had.
Saurabh Mashruwala
So if you look at our project under pipeline, we have about INR19,000 crores project, RE project under pipeline, which will be — capex will be incurred over the next two to three years. Plus we have a distribution capex every year we generally spend about INR2,000 crores, so which is another INR6,000 crores. But there are small transmission projects. There is a pump storage project also we signed the PPA also about INR12,000, INR13,000 capex is there. So our capex outgo in next four, five years, I would say to all put together will be about INR35,000 to INR40,000 crores. So every year January, we generate about INR2,000 crores free-cash flows, which is available for funding the equity of 30% equity of the project. Apart from this QIP money plus internal, we are able to fund these about INR400 INR40,000 crores capex next five years period. So that — we will get invested in those upcoming projects.
Satyadeep Jain
You’ve raised cash now and the PSP will come as per your own — because you need to go through DPR and all this. So the outlay for PSP will not most likely start in the next one and a half, two years. So you’ve already raised the QIP money. Are you going to deploy it somewhere for the next 1.5 years, two years before PSP kicks-in? That because your internal cash flows seem to be sufficient to meet your capex for the next two years at least?
Saurabh Mashruwala
So we have — we have prepaid the debt from the CYP money. So we have — we have reduced the debt. So once this project will start — once we deploy the money in this renewal project and some of project, we start raising the money for the funding of this project. Currently, as of now, we have — we have prepaid the date from this QIP money.
Satyadeep Jain
The entire QIP you — 75% of that you used to repay the existing debt on the balance sheet.
Saurabh Mashruwala
Yes.
Satyadeep Jain
Okay. And sir, just wanted to understand on the LP, the long-term take or pay contract you have for LNG. I think last year somewhere you were looking at maybe contracting more cargoes versus what you have. What is some of these take or pay contracts that you signed? Are they coming up for expiry sometime? And are you looking to — I think last-time we had mentioned you’re looking to increase the quantum of those contracts. Is that still the thought process?
Saurabh Mashruwala
So as of now till 2027, every year three cargoes we are contracted per year. So — and we are in fact in the — we currently we are evaluating tying up the further cargoes. So at appropriate time, we will do the tie-up. So in fact we have launched a tender in the month of August for the further type of the cargo. So we are in the process of doing it at this moment.
Satyadeep Jain
No thought of increasing the quantum of takeoff right? Whatever number of cargoes you had the same cargoes you will have in future.,
Rishi Shah
I think what Saurabh told was that we are looking at tying up additional cargoes because if you remember, we did tie-up cargoes for three years in the international market, which is getting over this year. So from next year, we don’t have firm tie-up. We are looking at tying up for a longer period, higher number of cargoes. So we would definitely want to tie-up the cargoes as and when the opportunity is available to tie that up.
Satyadeep Jain
Okay, fair. Just one quick question. On the merchant project, every quarter this seems to be pushed out for last several quarters. What is causing the delay? Is it something specific to this project that in terms of — because it seems to be based on internal cash flows and also what is causing the delay in this?
Saurabh Mashruwala
So there is no delay, I would say perhap. There is — we are on-track in terms of implementing the project.
Satyadeep Jain
But every — if you look at the trajectory, every quarter, this gets pushed out by another quarter. There is nothing specific to this project.
Saurabh Mashruwala
No, I think we are working on — so I think last — last-time what we have said was it was likely by September ’25 and now we are saying by December ’25. So typically what happens in such kind of projects is that what we put out is the entire project commissioning date. It will happen progressively and since this does not have a PPA, any windmill or any solar module commission will start selling power. So this is pushed out by 1/4 because of certain reasons in terms of certain connectivity and land-related issues, but that would be for a smaller part of it. One, when we put out this remarks, it is for the entire project. So it does not mean that we’ll not do the project. Project will start getting commissioned not from the entire it by September ’25. Progress will it get commissioned.
Satyadeep Jain
Okay. Thank you and wish you all the best.
Operator
Thank you. The next question comes from the line of Nikhil Abiangar from UTIMF. Please go-ahead. Nikhil, sir, your line is unmuted. Please proceed with your question. Nikhil sir, if you have self-muted the line, please unmute and proceed with your question. As there is no response from the line of current participant, we’ll move on to the next question. The next question comes from the line of Barani from Avendus Spark. Please go-ahead.
Bharani
Yeah, good evening. Am I audible? Yes. Okay. So I have a conceptive question wherein Agra already is in DV VNL, which is also now is put up for privatization or at least that is what the government is working towards. Now if someone other than Torrent wins this VNL did, how will our operator will continue to be with us.
Saurabh Mashruwala
So impact, how can we have an impact? Because we have a contract that we went up by up to 2030. So by that time, there won’t be an impact. So I think, Barani, we are a franchisee there. We are not a licensee there. What UP government is thinking about is giving the license out. So anybody who wins that will become a licensee. So instead of DVNL, anybody who wins that will become the licensee. So that contract will get shifted
Bharani
, client will change for us.
Saurabh Mashruwala
Correct. That’s right. Yeah, because it’s a biled contract, it won’t have impact up to 2030 till the contract is over.
Bharani
Is there any say renewal — renewal cost in this contract for.
Saurabh Mashruwala
We’ll discuss at that point of time because 2030 is about five years away, I would say. So we’ll discuss at that point near to the contract expiry date with agra like what we did in the case of P1D.
Bharani
Okay. Okay. Fine. My second question is on this thermal generation segment’s EBITDA. So from merchant sales, you know what is the gain in this particular quarter specifically?
Saurabh Mashruwala
So as we said earlier in the call, we will not provide to the breakup of the merchant and the LNG sales. But major — this INR75 crores incremental contribution is coming from the three segments, three items, one is higher merchant sales contributions by higher LNG sales contributions and some forex gain also
Bharani
Okay. Okay. So like from merchant sales, like in the month of April, May, June, that is first-quarter, we benefited due to second level, but now we will be selling in the open-market, if I’m not on, correct?
Saurabh Mashruwala
Sorry, can you please repeat again?
Bharani
We’re selling. We’ll be selling the merchant power in the open-market.
Jayprakash Khanwani
Yes, yes. We are selling the over exchange, I would say
Bharani
And yes, correct. So because the prices have come down so we would be obviously targeting to sell only in the evening peak hours. Is that how it is or?
Saurabh Mashruwala
Yes, we are targeting the peak hours sales evening peak hours. Okay. Understood. Understood. Okay. And what is this forex gain related to? So basically, if you look at last year, euro rate was higher. This year it was lower. So it’s basically gain which we have booked under some of the long-term O&M contracts, I would say.
Bharani
So OANM contracts. O&M contracts for some third-party vendor is doing higher on that year.
Saurabh Mashruwala
Yeah. So for our plants, there are O&M contracts which we have signed, we are long-term basis. So on a quarterly basis, there is a provision which is made, but the payable is in euros. So if euro appreciates against rupee, there is an incremental outflow and that’s where it leads to a foreign currency loss on a provisional basis, on an accounting basis, that’s not an actual cash outflow or inflow. And then if it depreciates, it becomes a gain. That’s what it is.
Bharani
Understood. Understood. Okay. That’s it from my side. All the best. Thank you.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference over to the management for closing comments.
Saurabh Mashruwala
Thank you for the joining up Power investor call. We have everybody to remain safe and healthy. Thank you so much.
Operator
Thank you. On behalf of Torrent Tower Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.