Metrics cut 1
- 50 MW captive solar project commissioning delayed to before end of next quarter (prior timeline not specified, but delayed due to Right-of-Way issues)
Event Participants
Executives
5 Parth Chauhan, Pankaj Sarda, Manish Sarda, Padam Kumar Jain, Nilay Joshi
Analysts
10 Ashish, Ashwini, Deepika Rathore, Digant Haria, Manav Gogia, Mann, Priyansh, Rajesh Bhandari, Veena Kaur, Vishal Patel
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹1,717 crores | Grew 9.4% YoY; includes ₹162.64 crores one-time revenue from regulatory approval of final project cost for 113 MW Sikkim hydropower plant |
| EBITDA | ₹762 crores | Highest ever quarterly EBITDA; includes one-time benefit of ~₹137.5 crores pre-tax (₹110 crores net of tax) |
| PAT | ₹478 crores | Highest ever quarterly PAT; includes ₹110 crores one-time net benefit; 9.4% YoY growth |
| Thermal Power PLF | 85.9% | Average PLF at 600 MW SKS thermal plant during Q1; steady generation through the quarter |
| PPAs Secured | 380+ MW | Medium and long-term power supply agreements signed out of 710 MW total saleable capacity; SKS accounts for ~330 MW at ₹5-6/unit tariff |
| Net Debt Position | Net debt-free | Net debt-free on both standalone and consolidated basis as of 30 June 2026 |
| Liquidity | >₹2,500 crores | Healthy cash and liquid investments as of 30 June 2026, funding all expansions through internal accruals |
Geographic & Segment Commentary
Energy Business: Contributed ~70% of consolidated EBITDA, remaining the key growth driver and earnings stabilizer. Thermal generation at SKS was steady with 85.9% PLF, while small hydropower plants were impacted by delayed monsoon conditions in Q1; however, July trends show better rainfall and improved generation momentum expected in Q2. The 113 MW Sikkim hydro plant was shut from 18 June to 5 July due to transmission tower collapse from heavy rainfall, but has resumed full operations with generation at par with last year despite the 13-day closure.
Metals (Steel & Ferro Alloys): Consolidated revenue declined QoQ due to multiple plant outages. The planned replacement of the 30 MW captive power plant at Raipur (now ready for trial operations, commercial ops expected by mid-August), 23-day scheduled maintenance at Vizag captive power plant, and 53-day refurbishment shutdown of one ferro alloys unit at Siltara all temporarily impacted production. Steel prices remained range-bound with mild negative bias, while ferro alloy prices saw modest improvement.
Mining: Development of Shahpur West high-grade coal mine remains on schedule with commissioning targeted before end of FY27; Bartunga Hill coal mine expected by end of FY28. Regulatory approvals for Gare Palma IV/5 and Sinduri coal blocks progressing as planned. Management clarified the 5 million ton coal target comprises Gare Palma IV/7 (1.8M tons), Shahpur West (0.6M), Sinduri (0.6M), and Gare Palma IV/5 (2M).
Company-Specific & Strategic Commentary
Capacity Expansion Pipeline: Thermal power brownfield expansion at SKS from 600 MW to 1,200 MW progressing—TOR study complete, environmental clearance expected in 6-8 months. Three small hydro projects in Chhattisgarh (74 MW aggregate) on schedule. 50 MW captive solar project delayed due to Right-of-Way issues on transmission line (railway land acquisition), now expected commissioning before end of next quarter. 66 MW Arunachal Pradesh hydropower project has key statutory approvals and land acquisition complete; construction to commence this year.
Sustainability & Efficiency: Investing ~₹300 crores including a waste heat recovery power plant at Vizag to improve energy efficiency and resource utilization, aligning with the company's sustainability agenda.
Balance Sheet Strength: All ongoing expansion projects funded through internal accruals; company now net debt-free on standalone and consolidated basis with liquidity exceeding ₹2,500 crores, providing flexibility to execute long-term growth plans.
Mineral Wool Diversification: New mineral wool project ramping up at 60-65% capacity utilization; demand exceeds production due to imported equipment stuck in West Asia crisis. FY27 revenue target of ₹90-110 crores; full capacity expected within 3-6 months.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Power Realization | ₹5-6/unit for PPA sales | Management confirmed PPA tariffs in ₹5-6 range; realizations expected to increase over time with inflation and peak demand growth, particularly for hydropower |
| IPP Generation | Better than FY26 | FY26 generation was ~415 crore units; management expects to cross this with a reasonable margin in FY27 |
| Thermal PLF | Improvement expected | Better capacity utilization driven by 30 MW captive power plant commissioning and improved power demand |
| Shahpur West Coal Mine | Commissioning by end FY27 | High-grade coal for sponge iron and ferro alloys plants; on schedule |
| Bartunga Hill Coal Mine | End of FY28 | New high-grade coal mine with better quality than Gare Palma IV/7 |
| SKS Thermal Expansion EC | 6-8 months for environmental clearance | TOR submission imminent (~3 months for acceptance), then public hearing and final EC |
| 50 MW Solar Project | Before end of next quarter | Delayed due to railway Right-of-Way issues; permission expected in 1-2 months |
| Mineral Wool Revenue | ₹90-110 crores for FY27 | Ramping up from 60-65% capacity; full capacity in 3-6 months; imported equipment constraints from West Asia crisis |
| Steel & Ferro Alloy Pricing | Stable with modest margin improvement | Ferro alloy margins may improve on softer raw materials; steel uptick possible if West Asia situation settles |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Approval Delays | Management identified regulatory approvals as the only material execution risk to the FY30 growth roadmap. SKS thermal expansion requires environmental clearance (6-8 months), and multiple mining and hydro projects depend on timely government approvals. |
| West Asia Conflict | Elevated oil prices from the ongoing conflict have raised input costs and created supply chain disruptions. Imported equipment for mineral wool project is stuck due to the crisis, delaying capacity ramp-up. Management expects overall impact to remain manageable given India's domestic demand-driven economy. |
| Steel Imports & China Exports | China continues exporting ~10 million tons/month due to weak domestic real-estate demand. Imports into India have once again exceeded exports after two quarters, partly due to FTAs. Government antidumping investigations are expected to address unfair imports. |
| Hydropower Monsoon Dependence | Small hydropower generation declined ~30% YoY industry-wide due to delayed monsoon. Q1 generation was impacted; Q2 remains dependent on rainfall patterns, though July trends are encouraging. |
| Solar Competition on Daytime Prices | Rising solar capacity has suppressed daytime power prices. Management notes BESS deployment and policy changes (concessional daytime tariffs for industry/charging stations) should rebalance the market, while peak-hour prices have risen with peak period extending from 5 to 8-10 hours. |
Q&A Highlights
Power Realization & PPA Strategy
- Question: Back-calculated power realization of ~₹8/unit seems high; with PPAs at ₹5-6/unit, will revenue per unit decline? (Digant Haria, GreenEdge Wealth)
- Answer: The ₹8 figure is incorrect—it includes prior period income adjustments. PPA tariffs are ₹5-6/unit and will be the general realization level, but will increase over time with inflation and peak demand, particularly for hydropower. (Manish Sarda)
Solar Impact on Power Prices
- Question: How does excess solar capacity during daytime affect Sarda's power business? (Digant Haria, GreenEdge Wealth)
- Answer: Solar has created excess daytime supply, but BESS deployment and policy changes (concessional daytime tariffs for industry/charging stations) will balance the market over time. Peak-hour prices have actually increased, with the peak period extending from 5 hours to 8-10 hours. (Manish Sarda)
One-Time Impact Details
- Question: What was the actual impact of the ₹110 crore one-time item on top line and EBITDA? (Manav Gogia, Yes Securities)
- Answer: ₹162.64 crores was added to revenue, ₹18 crores to other income as interest on the tariff award. At EBITDA level, add ~25% tax to the ₹110 crores net figure (i.e., ~₹137.5 crores pre-tax). (Manish Sarda)
PPA Portfolio Details
- Question: How much of the 380 MW PPAs pertain to SKS and at what tariff? (Manav Gogia, Yes Securities)
- Answer: ~330 MW pertains to SKS at ₹5-6/unit tariff. Maximum saleable quantity from SKS is 540 MW; the decision on how much to commit under PPAs versus merchant sales is a strategic call. (Manish Sarda)
Coal Mining Capacity Build-up
- Question: What mines constitute the 5 million ton target and what is the timeline? (Manav Gogia, Yes Securities)
- Answer: Gare Palma IV/7 (1.8M tons), Shahpur West (0.6M tons, commissioning by end FY27), Sinduri (0.6M tons, provisional pending exploration), and Gare Palma IV/5 (2M tons). New mines have better coal quality than Gare Palma IV/7, so expansion of IV/7 is not being considered in the immediate future. (Manish Sarda, Nilay Joshi)
SKS Expansion Environmental Clearance
- Question: What is the latest status on environmental clearance for the 600 MW to 1,200 MW brownfield expansion? (Deepika Rathore, NG Securities)
- Answer: TOR study is complete and in final stages of submission. Expect acceptance in ~3 months, then public hearing, with final environmental clearances in 6-8 months. Consultant will be appointed during this period and procedures will commence thereafter. (Pankaj Sarda)
FY27 Growth Drivers
- Question: What will drive revenue/EBITDA growth in FY27 given most projects come later? (Digant Haria, GreenEdge Wealth)
- Answer: Primary drivers are improvement in power price realizations, better IPP capacity utilization, and commissioning of the 30 MW captive power plant which will increase steel production volumes. (Manish Sarda)
PLF & Generation Outlook
- Question: How do you see PLFs and merchant realizations evolving? (Vishal Patel, Patel Investments)
- Answer: Annual IPP PLF should be better than last year (415 crore units in FY26, expect to cross with reasonable margin). Captive power utilization will improve with the 30 MW commissioning. Hydro generation depends on rainfall—June generation was at par with last year. (Manish Sarda)
Pricing Environment for Steel & Ferro Alloys
- Question: How do you see pricing evolving in H2 FY27? (Ashwini, Fin&Min; Veena Kaur, Sarlomi Investments)
- Answer: Both steel and ferro alloy prices expected to remain stable. Ferro alloy margins may improve due to softening raw material prices. Steel could see uptick if West Asia situation settles completely, supported by strong domestic demand from infrastructure, data centers, and post-monsoon construction. (Manish Sarda, Pankaj Sarda)
Arunachal Pradesh Hydro Project Timeline
- Question: When will construction begin on the 66 MW Arunachal Pradesh project? (Mann, Sunidhi Investments)
- Answer: Drilling and soil investigation underway, consultant appointed. Detailed engineering will commence once data is available—construction expected to start this year itself. (Pankaj Sarda)
Transmission Tower Restoration Costs
- Question: What was the generation loss and restoration cost from the Sikkim transmission tower collapse? (Priyansh, Private Investor)
- Answer: Restoration cost is negligible and fully covered by insurance. Real loss was ~5 days of generation in July, already reflected in Q1 results. No residual impact expected in Q2. (Manish Sarda)
Mineral Wool Ramp-up
- Question: What is the revenue and EBITDA target for mineral wool in FY27? (Priyansh, Private Investor)
- Answer: Currently at 60-65% capacity utilization with demand exceeding production. Imported equipment stuck due to West Asia crisis is delaying ramp-up. FY27 revenue target of ₹90-110 crores; full capacity expected in next 3-6 months. Project is not yet profitable. (Manish Sarda)
Key Takeaway
Sarda Energy & Minerals delivered its highest ever quarterly EBITDA of ₹762 crores and PAT of ₹478 crores in Q1 FY27, supported by a ₹110 crore one-time net benefit from the Sikkim hydropower regulatory approval, with total income of ₹1,717 crores growing 9.4% YoY despite planned maintenance shutdowns and unplanned outages across thermal, ferro alloys, and captive power assets. The energy business contributed ~70% of consolidated EBITDA, with 380+ MW of PPAs secured (330 MW at SKS at ₹5-6/unit) providing improved revenue visibility, while the metals segment faced temporary production disruptions from the 30 MW captive power plant replacement (commercial operations by mid-August), Vizag maintenance, and Siltara refurbishment. The company is net debt-free with liquidity exceeding ₹2,500 crores, funding all expansions through internal accruals, including the SKS 600→1,200 MW brownfield expansion (EC in 6-8 months), Shahpur West coal mine (end FY27), Bartunga Hill (end FY28), 66 MW Arunachal Pradesh hydro (construction this year), and a 50 MW solar project (next quarter). Management refrained from formal FY27 guidance citing volatile power and steel markets, but expects better IPP generation than FY26's 415 crore units, improved power realizations with July IEX prices at ₹5/unit versus ₹4.20 last year, and mineral wool revenue of ₹90-110 crores, with key watch points being regulatory approval timelines, West Asia-driven input cost pressures, and monsoon-dependent hydro generation.