Event Participants
Executives
2 Rishi Shah, Saurabh Mashruwala
Analysts
9 Apoorva Bahadur, Atul Tiwari, Harsh Singh, Mohit Kumar, Satyadeep Jain, Shirom Kapur, Sumit Kishore, Vishal, 1 Unidentified
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Reported PBT | ₹925 crores | -₹60 crores/-6.1% YoY vs ₹985 crores; prior year included ₹59 crore non-recurring FX loss |
| Adjusted PBT | ₹925 crores | -₹119 crores/-11.4% YoY vs ₹1,044 crores adjusted; decline driven by thermal, partly offset by distribution/renewables |
| Effective Tax Rate | 28% | +300 bps YoY from 25%; increase on completion of tax holiday period under Section 80-IA for certain units |
| Thermal Segment Contribution | -₹123 crores YoY | Lower merchant gains/LNG trading (-₹87 crores) and O&M expense increase (-₹51 crores) from gas plant upgrade exercise; Nabha acquisition added ₹15 crores (5 days) |
| Distribution & Transmission Contribution | +71% profit YoY | Favourable regulatory orders (carrying cost ₹41 crores), improved operations (+₹19 crores) on higher ROE/ROCE and franchisee volumes +4%, new transmission project +₹11 crores |
| Renewables Contribution | +₹19 crores YoY | Newly commissioned capacity and improved wind/solar PLF; offset by absence of ₹46-47 crore LPS income booked in prior year |
| Installed Generation Capacity | 6.6 GW | Comprises 2.7 GW gas, 1.8 GW coal, 2.1 GW renewables as of 30 June 2026; 70 MW RE commissioned in Q1 |
| RE Capacity Under Implementation | 4.6 GW | Commissioning phasing: ~1.2 GW in FY27, 1.4-1.6 GW in FY28, balance in FY29 |
| Total Capex (Q1 FY27) | ₹2,300 crores | RE ₹1,550 crores, thermal ₹125 crores, transmission ₹120 crores, distribution ₹500 crores |
| RE Capex Incurred (Cumulative) | ₹8,800 crores | Against total plan of ₹29,600 crores for RE projects under implementation |
| Franchisee Volume Growth | +4% YoY | Improved volumes and increased tariff across franchisee distribution business |
| Merchant Power Sold | 445 MUs | Sold in high DAM market during peak demand periods; contribution lower by ₹87 crores YoY |
Geographic & Segment Commentary
Thermal Generation (Gas & Coal): Despite elevated gas prices from Middle East geopolitical tensions, thermal maintained healthy operating margins in merchant operations, though gains from merchant sales and LNG trading fell ₹87 crores YoY. The company undertook a plant upgrade exercise at its gas-based units (O&M up ₹51 crores) to improve flexibility and availability, enabling better margins in high DAM markets and more efficient cyclical operation amid rising renewable penetration. Nabha Power acquisition (consummated 25 June 2026) contributed ₹15 crores for five days; steady-state EBITDA expected at ~₹1,000 crores annually.
Distribution & Transmission: Segment delivered 71% higher profit, driven by favourable regulatory orders approving ₹41 crores carrying cost, improved operational contribution of ₹19 crores (higher ROE/ROCE on capitalization and new tariff regulations), 4% franchisee volume growth, and ₹11 crores incremental profit from a newly commissioned transmission project. Ahmedabad circle posted 10% volume growth (in line with national average); Surat and Dahej, being industrial, showed more muted growth; DNH lower demand treated as exceptional. Agra AT&C losses rose due to absence of prior-year realization from Agra Nagar Nigam Limited.
Renewables: Segment contributed ₹19 crores positive, supported by newly recommissioned capacity and improved PLF across wind and solar, partially offset by the absence of ~₹46-47 crores LPS income booked in Q1 FY26. Operational EBITDA actually grew ₹66 crores YoY on an adjusted basis, excluding LPS. Management confirmed 70 MW commissioned in Q1, taking RE capacity to 2.1 GW.
Company-Specific & Strategic Commentary
Nabha Power Acquisition: Acquisition consummated on 25 June 2026; added ~₹6,000-6,500 crores gross debt (₹3,000 crores at Nabha, ₹3,800 crores at Torrent Power). Q1 contribution of ₹15 crores reflects only five days of consolidation. Steady-state cash-flow EBITDA of ~₹1,000 crores annually (reported basis slightly lower), with PLF running at 85%.
Gas Plant Flexibility Upgrades: Upgrade program at gas-based units to improve plant flexibility, availability, and long-term O&M costs is being progressively rolled out. These upgrades enable participation in high DAM markets where ₹20/MMBtu gas remains workable for 2-3 hours daily peak slots, and position plants competitively against battery storage once gas normalizes to $6-8/MMBtu.
Project Implementation - Anuppur Thermal (1.6 GW): PPA executed with MP Power Management Company, Letters of Award issued for BTG and balance of plant, environmental clearance received; commissioning expected in 6-7 years; ₹450 crores incurred to date.
Project Implementation - Pumped Storage Hydro (3 GW, Maharashtra): Energy Storage Facility Agreement with MSEDCL executed, Letters of Award issued for Civil & Hydro-Mechanical and Electrical & Mechanical packages; environment and forest clearance received; commissioning in 3-4 years; ₹1,130 crores incurred to date.
AMGEN Replacement Plant: State government approved coal allocation for a proposed ~800 MW replacement unit for the 362 MW AMGEN plant (which has permission to operate until December 2030). Central government coal allocation pending; land location not yet finalized, possibly outside Gujarat.
Capex Program: FY27 RE capex guided at ~₹10,000 crores; Q1 RE capex of ₹1,550 crores vs ₹335 crores in Q1 FY26 and ₹1,200 crores in Q4 FY26, reflecting accelerated execution.
Bidding Philosophy: Company restricts bidding to achieve mid-teen IRR thresholds; participating in almost all major tenders but prioritizing value over capacity growth.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| RE Commissioning (FY27) | ~1.2 GW | Q2 expected ~400 MW, H2 expected ~800 MW; phasing tied to transmission availability |
| RE Commissioning (FY28) | 1.4-1.6 GW | Balance of 4.6 GW pipeline commissioned in FY29 |
| RE Capex (FY27) | ~₹10,000 crores | Q1 incurred ₹1,550 crores; aligned with commissioning schedule |
| Nabha Power EBITDA | ~₹1,000 crores/annum steady state | Cash-flow basis; PLF ~85%; reported EBITDA slightly lower |
| Anuppur Thermal (1.6 GW) | Commission in 6-7 years | PPA executed, BTG/BoP letters awarded, environmental clearance received |
| Pumped Storage Hydro (3 GW) | Commission in 3-4 years | ESFA with MSEDCL executed, E&M and Civil packages awarded |
| Solapur Transmission | Commission in FY27 | ₹330 crores cumulative capex incurred to 30 June 2026 |
| LNG Sourcing | 10 cargoes contracted at Brent-linked pricing | Spot cargoes (~$20/MMBtu) too expensive; three summer cargoes already imported |
Risks & Constraints
| Risk | Context |
|---|---|
| Elevated LNG Spot Prices | Spot gas at ~$20/MMBtu makes merchant operations challenging; management selling only in high DAM market 2-3 hours daily. Mitigation: Brent-linked contracted cargoes, flexibility upgrades, expected normalization to $6-8/MMBtu over horizon. |
| Transmission Infrastructure Delays | ROW issues and PGCIL transmission line schedules are delaying multiple RE project commissioning timelines; management plans execution to coincide with line availability, but FY27 target of ~1.2 GW carries execution risk. |
| Renewable Project Timelines | Several projects (SECI XII, SECI XVI wind, hybrid projects) extended into FY28; delays driven by transmission infrastructure, not internal execution issues. |
| Tax Rate Normalization | Effective tax rate increased from 25% to 28% on completion of Section 80-IA tax holiday for certain units; this is a structural step-up, impacting reported profitability on an ongoing basis. |
| AT&C Loss Variability | Agra circle AT&C losses rose year-on-year due to absence of prior-year realization from Agra Nagar Nigam Limited; treated as exceptional but contributes to quarter-over-quarter volatility. |
| Demand Softness in Industrial Circles | Surat, Dahej and DNH volume growth muted versus national average; DNH specifically flagged as exceptional, but industrial-area demand is structurally lower growth than residential. |
Q&A Highlights
Nabha Power Economics and Debt
- Question: Can you share Nabha Power's revenue, adjusted EBITDA for Q1, and post-acquisition gross debt position? Is ₹250 crores EBITDA per quarter sustainable? (Mohit Kumar, ICICI Securities)
- Answer: Only five days of income booked (~₹15 crores profit) since acquisition closed on 25 June; gross debt added ~₹6,000-6,500 crores (₹3,000 crores in Nabha books, ₹3,800 crores in Torrent Power books). Steady-state cash-flow EBITDA of ~₹1,000 crores annually is a good estimate; reported basis slightly lower. (Saurabh Mashruwala, Rishi Shah)
Renewable EBITDA Differential and LPS Income
- Question: Why is renewable EBITDA only ~₹20 crores higher despite 30% generation growth? (Mohit Kumar, ICICI Securities)
- Answer: Prior year Q1 included ₹46-47 crores of LPS (late payment surcharge) income that is not available this year; excluding LPS, renewable EBITDA is actually higher by ~₹66 crores. LPS income was a one-time item in Q1 FY26 only. (Saurabh Mashruwala)
Distribution Demand and AT&C Losses
- Question: Ahmedabad grew 10% but Surat, Dahej, DNH were muted; AT&C losses increased across circles. What's driving this? (Satyadeep Jain, Ambit Capital)
- Answer: Ahmedabad growth is comparable to national average; Surat and Dahej are industrial towns with structurally lower growth. DNH lower demand is exceptional, not repetitive. Agra AT&C losses increased materially only because prior year had a large realization from Agra Nagar Nigam Limited; DDDNH and SMK are not materially different from last year. (Saurabh Mashruwala)
Merchant Market Outlook and Gas vs. Battery Competition
- Question: With large untied capacity and rising BESS installations, how do you evaluate merchant gas potential and the risk from battery storage? (Satyadeep Jain, Ambit Capital; Apoorva Bahadur, IIFL)
- Answer: Peak and summer evening demand are prolonging, providing ongoing merchant opportunities. Once gas normalizes to $6-8/MMBtu, variable cost of ~₹4-4.5/kWh would be competitive versus battery storage (solar ₹2-2.5 plus battery ₹3 = ₹5-5.5/kWh). Merchant sales of 445 MUs in Q1 were primarily in high DAM market. (Saurabh Mashruwala)
RE Commissioning Phasing and FDRE Project Delays
- Question: Is the 1.2 GW FY27 commissioning target back-ended? Are STU/transmission delays affecting specific projects? (Sumit Kishore, Axis Capital; Shirom Kapur, Jefferies)
- Answer: Q1 commissioned 70 MW; Q2 expected ~400 MW, H2 balance ~800 MW. Delays in some projects are due to transmission line availability and ROW issues; management coordinates with transmission utilities but guided that after factoring in all issues, the 1.2 GW target remains achievable. (Saurabh Mashruwala, Rishi Shah)
AMGEN Replacement Plant (800 MW)
- Question: Media reports suggest shifting the AMGEN plant and setting up an 800 MW replacement. What is the official status? (Sumit Kishore, Axis Capital)
- Answer: AMGEN is 362 MW with permission to operate until December 2030. Company requested double coal allocation (from state) for a ~800 MW unit to replace AMGEN for Ahmedabad distribution. State government has approved coal allocation; central government approval is pending. Land location not finalized, and the plant may not be in Gujarat. (Saurabh Mashruwala)
C&I and Data Center Tie-ups for Gas Plants
- Question: Any plans to tie gas plants to data centers or C&I customers for firm power? (Apoorva Bahadur, IIFL)
- Answer: C&I customers prefer renewable power (RTC); gas does not fit into that category. Data centers also favor renewables. Key constraint: gas prices cannot be hedged long-term, so locking a fixed-price PPA carries inherent tariff risk. No plans in the short-to-medium term. (Saurabh Mashruwala)
LNG Sourcing and Pricing
- Question: What is LNG availability and landed price, given the contracted cargoes from the last call? (Atul Tiwari, JP Morgan)
- Answer: Three cargoes contracted for summer were imported and used to meet distribution demand. Balance period relies on spot cargoes selectively when opportunity is affordable. Ten cargoes are contracted at Brent-linked rates (not spot). Spot at ~$20/MMBtu is unaffordable for PPA-linked sales; purchases planned to keep margins reasonable in merchant market. (Saurabh Mashruwala, Rishi Shah)
Gas Plant Economics at $20/MMBtu
- Question: At $20/MMBtu (variable cost ~₹30/kWh), how are you able to sell? Is there still demand, or are cargoes cheaper? (Vishal, PL Capital)
- Answer: At $20, sales only work in high DAM market (not regular market capped at ₹10). Plant flexibility upgrades enable cyclical operation with frequent start/stops and 2-3 hours of daily peak pricing; however, high PLF operation is not possible at $20 — the price is quite challenging. (Saurabh Mashruwala, Rishi Shah)
Franchisee Pipeline
- Question: Any new franchisee opportunities in the pipeline, particularly in UP? (Harsh Singh, Sameeksha Capital)
- Answer: UP franchisees will likely come post-election given prior agitation issues; state subject. Maharashtra is a possible opportunity, but nothing concrete on the franchisee side currently. (Saurabh Mashruwala)
Key Takeaway
Torrent Power reported Q1 FY27 adjusted PBT of ₹925 crores, down 11.4% YoY on an adjusted basis, with thermal contributing negatively (-₹123 crores) due to lower merchant gains (₹87 crores) and one-off gas plant upgrade costs (₹51 crores), while distribution & transmission (+71% profit) and renewables (+₹19 crores) partially offset the decline. The Nabha Power acquisition closed on 25 June and is expected to add ~₹1,000 crores steady-state cash-flow EBITDA annually. Installed capacity stands at 6.6 GW, with 4.6 GW of renewable capacity under implementation and a ₹10,000 crore FY27 RE capex plan; commission phasing implies ~1.2 GW in FY27 (Q2: 400 MW, H2: 800 MW), 1.4-1.6 GW in FY28. Gas-based merchant strategy is being repositioned through plant flexibility upgrades to capture high DAM market slots even at elevated $20/MMBtu prices, with management confident of competitiveness versus battery storage once gas normalizes to $6-8/MMBtu. Key watch items include transmission infrastructure delays impacting renewable commissioning timelines, tax rate normalizing to 28% on expiry of 80-IA benefits, and AT&C loss volatility in Agra; the 800 MW AMGEN replacement plant awaits central coal allocation approval.