Adani Energy Solutions Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Ashok Jagetiya, Kandarp Patel, Prashant Soni, Raj Kumar Jain

Analysts

10 Aditya Sahu, Ashish, Darshan Parmar, Lavina Quadros, Mahesh Patil, Mohit Pandey, Nikhil Nigania, Nirmal, Raman KV, Vishal Periwal

Financials & KPIs

Note: Metrics below reflect disclosures made during the call; full financial statements were published separately in the results presentation.

Geographic & Segment Commentary

• Transmission: AESL's largest growth vertical, with network at ~28,000 circuit km. KPS-1 HVDC commissioning targeted around December 2029, with the Bhadla-Fatehpur (Rajasthan) HVDC at the beginning of 2029. Annual bid opportunity is a minimum of ~₹1 lakh crores across central and state projects; AESL maintains ~25% market share, targeting ₹20,000-25,000 crores of annual capex additions. STU projects (Maharashtra, Rajasthan, UP) are emerging as a new ~₹20,000-25,000 crores annual pipeline as states augment intra-state networks after years of inter-state build-out.

• Distribution: Urban distribution utilities serving Mundra and Mumbai growing at a stable pace. The Mumbai HVDC commissioned last year supported the region during peak summer demand; load-center transmission augmentation is emerging as a new HVDC demand driver.

• Smart Metering: India's largest smart metering platform - 13.4 million meters installed cumulatively (2.1 million in Q1) against a 24.6 million order book. Remaining balance tenders of ~100-120 million meters across Tamil Nadu, Karnataka, Telangana and parts of Andhra Pradesh. IntelliSmart acquisition, pending CCI approval, will expand the portfolio to ~47 million meters with a similar return profile to AESL's existing smart meter business.

• Energy Solutions: Fully operationalized as the fourth vertical. ~5,000 MW supply tied up on take-or-pay basis, 3,500 MWh battery storage contracted on fixed hire, 350 MW C&I customers signed. Q1 EBIT of ₹590 crores on 13,181 MUs. Until long-term offtake contracts are finalized, volumes are sold on exchange and bilateral contracts (₹3-₹15 per unit; 1-13 months tenure). Management targets 7.5 GW+ of market opportunity by 2031 across data centers, utilities and C&I.

Company-Specific & Strategic Commentary

• Full-Scale Utility Transition: AESL has operationalized all four verticals - transmission, distribution, smart metering and energy solutions - with future growth "locked in"; management expects consistent quarter-on-quarter results going forward.

• Back-to-Back Contracting: Energy Solutions strategy is to lock supply and sales on long-term take-or-pay contracts, keeping only a small percentage of capacity liquid for market optimization. Minimal direct capex is expected, though last-mile transmission infrastructure for consumers or generators may require enabling capex with associated margins.

• IntelliSmart Acquisition: Pending CCI approval; combined AESL + IntelliSmart portfolio of ~47 million meters with natural volume growth provisions within existing contracts; return profile aligned with AESL's smart metering business given scale benefits achieved in capex and opex.

• Data Center Opportunity: Currently one contract at 20-25 MW, but every 1 GW of IT load requires ~1.5 GW of consumption load and 3.5-4 GW of renewable capacity plus storage - positioning AESL's 5 GW supply stack for significant data center offtake. Group data center pipeline is a key near-term demand source.

• Maharashtra RTC 2.5 GW Contract: Adani Power won the LOI under a group-level understanding; AESL will be a major participant in the contract solutioning and may buy power from Adani Power to fulfil the obligation.

• Transmission Pipeline & STU Expansion: Minimum ~₹1 lakh crores of annual bidding (central + state); HVDC demand emerging from load centers in addition to renewable evacuation; STU projects in Maharashtra, Rajasthan and UP becoming an active incremental pipeline.

• Parallel Licenses: Application pending with the Maharashtra commission; the state government has advised awaiting the central tariff policy amendment, after which the matter is expected to move ahead.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Smart Metering: IntelliSmart Acquisition & Balance Tenders

• Question: Will IntelliSmart's return profile match AESL's existing smart meter portfolio, and what balance tenders remain over the next 3-4 years from central/state governments? (Lavina Quadros, Jefferies)
• Answer: Balance tenders are ~100-120 million meters across Tamil Nadu, Karnataka, Telangana and parts of Andhra Pradesh. IntelliSmart is before the CCI for approval; its return profile will be broadly similar to AESL's, given the capex/opex scale benefits AESL has achieved over the last two years. (Kandarp Patel)

Smart Meter Revenue Accounting

• Question: Why did reported smart meter operating revenue/EBITDA decline QoQ despite a rising installation base? (Mahesh Patil, ICICI Securities)
• Answer: Operating revenue from commissioned meters actually improved from ₹68 crores to ₹161 crores QoQ. The reported decline reflects an accounting treatment where construction/capex is booked as both revenue and expense; Q1 installations were 2.1 million meters. The press release provides EBITDA on the conventional method. (Kandarp Patel, Prashant Soni)

Energy Solutions: Business Model, Spreads & Annuity Potential

• Question: What spread can be expected in the solutions-management business vs position-taking, and will locked-in contracts create annuity-like revenue? (Ashish, MLP)
• Answer: Services spread is ~₹0.03 per unit; position-taking margins are higher but contract-specific. The objective is back-to-back long-term locking on both sides with only a small open position for optimization. Minimal direct capex is involved, though last-mile infrastructure for consumers/generators may require enabling capex. Current sales include exchange and bilateral contracts at ₹3-₹15 per unit with tenures of 1-13 months, utilizing 3,500 MWh of contracted storage to create differentiated products. (Kandarp Patel)

Energy Solutions: EBIT Breakup, Sustainability & Scale-up Target

• Question: What is the breakup of the ₹590 crores EBIT, is the number sustainable given seasonal market conditions, and what is the scale-up target? (Vishal Periwal, PL Capital; Ashish, MLP)
• Answer: ~₹570 crores EBIT came from long-term contracted positions on 3,325 MUs; only ~400-500 MUs is currently under contract with 350 MW C&I customers, with the rest sold on exchange/bilateral. Management acknowledged year-to-year and quarter-to-quarter variability from open positions and is closing both sides without time lag. The 7.5 GW+ by 2031 is the targeted market opportunity; the 5 GW RE tie-up is modest relative to end-use - every 1 GW of data center load requires ~3.5 GW of renewable capacity. (Kandarp Patel, Raj Kumar Jain)

Energy Solutions: Cash Flow Mechanics

• Question: How do revenues flow through to EBITDA in the Energy Solutions platform, and what are the main expenses? (Raman KV, Sequent Investments)
• Answer: The business has two parts - services/trading (high volume, low margin) and the supply-consumption stack. Revenue comes from long-term sales to utilities, data centers and C&I customers; the main cost is power purchased from generators under take-or-pay PPAs. Timing and quantum mismatches between supply and sales contracts create short-term trading opportunities. Capex for last-mile transmission infrastructure to consumers carries additional margins. (Raj Kumar Jain)

Data Center Demand & Power Mix

• Question: What portion of the ~13 billion units handled is from data centers, and what power mix are they seeking for non-solar hours? (Nirmal, Aditya Birla Sun Life AMC)
• Answer: Data center volume is currently negligible - one contract at 20-25 MW - but significant long-term contracts are expected from large customers and utilities. Every 1 GW of IT load requires ~1.5 GW of consumption load and 3.5-4 GW of renewable capacity plus storage. Customers with higher green mandates understand and pay for storage costs; all Indian data centers are grid-connected, not off-grid. (Kandarp Patel, Raj Kumar Jain)

AGEL Supply Tie-up & Maharashtra RTC Contract

• Question: How much of the 5 GW is from the sister company, how is price discovery done, and does AESL compete with Adani Green? Also, is AESL part of the Maharashtra 2.5 GW RTC contract won by Adani Power? (Nikhil Nigania, Bernstein)
• Answer: ~4,000 MW is from AGEL and the rest from third parties, at market-linked pricing evaluated on quantum and pricing options. AGEL does not provide solutioning or sell to data centers; AESL is one of AGEL's customers, and essentially all C&I exposure flows through AESL. For the Maharashtra RTC, Adani Power received the LOI under a group-level understanding, but AESL will be a major participant and may buy power from Adani Power to fulfil the contract. (Kandarp Patel)

HVDC Timelines & Transmission Bid Pipeline

• Question: What are the commissioning timelines for the KPS-1 and Bhadla-Fatehpur HVDC projects, and what is the bid pipeline? (Aditya Sahu, HDFC Securities)
• Answer: KPS HVDC commissioning is around December 2029; Rajasthan (Bhadla-Fatehpur) at the beginning of 2029. Annual bidding opportunity is a minimum of ~₹1 lakh crores combining central and state projects. HVDC demand is now emerging from load centers - the Mumbai HVDC commissioned last year helped the region during summer - and STU projects in Maharashtra, Rajasthan and UP are becoming increasingly active. (Kandarp Patel)

Right-of-Way Challenges & STU Payment Mechanism

• Question: Where do things stand on right-of-way challenges, and how does the STU payment mechanism compare with central projects? (Mohit Pandey, Citi)
• Answer: ROW is an industry-wide issue; AESL resolves issues at ground level, works in parallel with administration rather than depending 100% on state machinery, and benefits from project concentration in regions with existing presence. STU payment mechanisms are identical to central projects: DISCOMs pay the STU monthly based on usage of the transmission network, and the STU pays all transmission companies. (Kandarp Patel)

Parallel License Status

• Question: What is the status of the parallel distribution license applications? (Mahesh Patil, ICICI Securities)
• Answer: The matter is pending with the commission; the Maharashtra government has advised waiting for the central tariff policy amendment, after which the matter is expected to move ahead. (Management)

Key Takeaway

Q1 FY27 marked AESL's arrival as a full-scale four-vertical utility, with transmission and the newly operationalized Energy Solutions platform driving growth while distribution and smart metering advanced at a stable pace. The company deployed ~₹3,500 crores of quarterly capex, installed 2.1 million smart meters (13.4 million cumulative), and generated ₹590 crores EBIT from Energy Solutions on 13,181 MUs - though management acknowledged the delayed monsoon contributed to favorable short-term market prices. Strategy centers on locking back-to-back long-term contracts for the 5,000 MW supply position, completing the IntelliSmart acquisition (47 million meters combined), and converting the ~₹1 lakh crore annual transmission bid pipeline into ₹20,000-25,000 crores of annual capex additions. Key watch items include open-position volatility in Energy Solutions until long-term offtake is signed, pending CCI and regulatory approvals, and right-of-way execution challenges. Management guided to consistent quarter-on-quarter results as locked-in growth converts into revenue.