Adani Power operates coal-fired thermal power plants, selling electricity to state distribution companies under long-term and medium-term power purchase agreements. The business currently runs 18.15 GW of installed capacity, with 95% tied up under contracts as of August 2026, leaving minimal exposure to volatile merchant markets. The competitive structure is effectively a scale game with a few large players, but Adani Power has established a structural cost advantage through pithead locations, advanced ultra-supercritical technology yielding 5% to 10% better thermal efficiency, and in-house project execution. Existing operating assets generate INR 22,000 crores EBITDA and INR 20,000 crores in yearly funds from operations, reflecting the high fixed-cost leverage inherent to power generation where margins depend heavily on plant utilization and capacity charge realization.
The economics of this business persist through cycles because new power purchase agreements feature fuel costs as a complete pass-through, meaning earnings derive almost entirely from fixed capacity charges paid for keeping plants available. This converts a historically commodity-like output into a contracted, annuity-style revenue stream. Barriers to entry are exceptionally high, evidenced by the 5 to 6 year timeline required to commission new thermal capacity, secure land, arrange fuel linkage, and complete equipment ordering. Adani Power has already ordered 100% of its boilers, turbines, and generators with delivery timelines staggered over 38 to 75 months, a replication timeline that effectively locks out competitors from meeting immediate baseload demand deficits projected by state resource adequacy studies up to 2032.
The inflection over the next 18 to 24 months is driven by the commissioning of the first phase of a 23.8 GW thermal expansion program, taking total capacity from 18.15 GW toward 45 GW by FY31. Specifically, 2.9 GW is scheduled for commissioning in FY27, including the 1,320 MW Korba Phase-II plant by December 2026 and the 1,600 MW Mahan Phase-II plant by Q3 FY28. By the end of FY28, total operating capacity will reach approximately 26 GW. This capacity addition is tied to new contracts with higher fixed charges, such as the Assam project at INR 4.16 per kWh capacity charge and Karnataka at INR 4.5 per kWh, which will lift EBITDA per MW above legacy PPAs. The company is also converting 1,200 MW of previously open merchant capacity at Butibori and Tuticorin to long-term contracts, reducing open merchant exposure from 10% to 3% over 6 to 7 years and stabilizing the revenue mix.
Management has demonstrated strict walk-talk consistency across the latest four concalls. In May 2025, they guided for INR 13,000 to 13,300 crores of annual capex, and by February 2026, they confirmed INR 15,000 crores of FY26 YTD capex incurred, exactly on schedule. They repeatedly committed to funding the INR 2 lakh crore expansion primarily through internal accruals without taking on excessive project-level debt, and in August 2026, they confirmed net debt-to-EBITDA will remain between 2 to 3 times, not crossing 3 times at any point. They also delivered on bringing the 600 MW Butibori plant online after 10 years and converting it to a 5-year PPA with Maharashtra at INR 5.55 per unit. Capital allocation remains disciplined, with INR 7,500 crores raised via AA-rated non-convertible debentures at 8% to 8.4% coupons to bridge the INR 60,000 crore interim funding gap, while targeting sufficient cash flow by FY32 to pay off entire debt.
The quantified earnings path relies on 2.9 GW of new capacity operating for a partial year in FY27 and 2.4 GW more in FY28, layered onto an existing INR 22,000 crore EBITDA base. For this to hold, the 1,320 MW Korba Phase-II must commission before December 2026 and operate at 90% availability despite facing 1 to 2 years of merchant market exposure before long-term PPA tie-ups. The single most important watchpoint is the Bangladesh Godda plant, where receivables stand at USD 400 million as of June 2026. While regular payments of USD 100 million per month are being received, any disruption to this cross-border cash flow or delays in upcoming state bids for the remaining 13,000 MW of uncontracted capacity would directly pressure the operating leverage thesis.
companyname: Adani Power Limited ticker: ADANIPOWER sector: Power Generation / Thermal Power (Independent Power Producer) Adani Power Limited is India's largest private-sector thermal power producer, headquartered in Ahmedabad. The company owns and operates 18,150 MW of power generating assets as of March 31, 2026, spanning eight Indian states (Gujarat, Maharashtra, Rajasthan, Haryana, Karnataka, Chhattisgarh, Madhya Pradesh, Tamil Nadu) and Bangladesh. The fleet is a mix of sub-critical, super...
Read the full report →capex, margin expansion, order book surge
FY31-FY32 capacity addition guided at 24 GW driven by thermal expansion projects
Guidance maintainedconsistent
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