30-Oct-2026 11:37:40
VEDANTA POWER Q2 FY27 CONCALL: TARGETS SHAKTI UNIT 2 COMMISSIONING BY FY27-END; ₹1,200 CR PENDING CAPEX, AIMS TO EXPAND CAPACITY TO 13 GW
• Shakti Unit 2 Guidance: Management expects commissioning activities to begin by Q4 FY27, with grid synchronization targeted around April 2027. • Shakti Unit 1: Unit 1 was synchronized with the grid in October 2026. Management expects a gradual ramp-up in generation and commercial power sales. • Pending Capex: Approximately ₹1,200 Cr of capital expenditure remains for Shakti Units 1 and 2, with spending planned across H2 FY27 and part of Q1 FY28. • Long-Term Capacity Aspiration: Management reiterated its ambition to expand total power generation capacity to approximately 13 GW, prioritizing brownfield opportunities before greenfield projects. • Five-Year Growth Ambition: Management aims to become India's third-largest private-sector power producer within the next five years, from its stated fifth-largest position currently. • Uttar Pradesh Power Tender: Company has bid for 1,600 MW capacity, comprising two 800 MW units, under a 4,000 MW power procurement tender. Management expects the tender outcome within approximately two months. • Brownfield Expansion Strategy: Shakti remains the first priority for capacity expansion, followed by potential projects at Meenakshi, Talwandi Sabo and other existing locations. • Brownfield Project Economics: Management estimates variable generation costs of approximately ₹2.50 per unit, including ₹2 of coal costs and ₹0.50 of other variable costs, for a potential brownfield expansion. • Future Power Realizations: Management believes tariffs above ₹6 per unit could generate attractive returns for new brownfield projects, with a potential payback period below six years under its assumptions. • Power Purchase Agreement Target: Approximately 74% of the company's capacity is currently covered by long-term PPAs. Management aims to increase medium- and long-term contracted capacity to 85–90%. • Merchant Power Strategy: Management plans to retain part of its capacity for merchant power sales while pursuing long-term and medium-term contracts. • Coal Linkage Security: Approximately 85% of coal requirements are secured through long-term linkages, supporting better fuel-cost visibility. • Meenakshi Domestic Coal Target: Management aims to achieve 100% domestic coal consumption, compared with 87% in Q2 FY27 and approximately 95% in September 2026. • Meenakshi Fuel Savings: Higher domestic coal usage generated approximately ₹127 Cr in cost savings compared with imported coal during Q2. • Meenakshi Operating Performance: Electricity sales increased 112% YoY to 1,417 million units, while EBITDA improved to ₹101 Cr from ₹28 Cr. • Meenakshi Unit Economics: Management indicated power realizations of approximately ₹6 per unit against costs of ₹5 per unit, supported by the shift toward domestic coal. • Shakti Power Realizations: Management indicated approximately ₹5.50 per unit realization under its Tamil Nadu contract, compared with an estimated variable cost of ₹2.50 per unit. • Shakti Merchant Sales: Management expects to sell available uncontracted power in the merchant market, with prices indicated around ₹5–6 per unit or higher. • Jharsuguda Performance: Plant availability improved to 98% from 48% YoY. Quarterly plant EBITDA reached ₹478 Cr, including approximately ₹58 Cr of legacy ash disposal cost recovery following a favorable regulatory ruling. • Talwandi Sabo Performance: Electricity sales reached approximately 2,945 million units during Q2, supported by improved operations. Ash-related revenue increased to ₹8.7 Cr from ₹1.6 Cr YoY. • Deleveraging Outlook: Management expects net debt-to-EBITDA to improve further as Shakti Unit 2 becomes operational, indicating a potential reduction toward approximately 2x. • Balance Sheet: Net debt declined to ₹7,444 Cr from ₹7,704 Cr QoQ, while the net debt-to-EBITDA ratio improved to 4.47x from 9.82x YoY. • Liquidity Position: Cash and cash equivalents stood at ₹1,063 Cr at the end of Q2 FY27. • Q2 Revenue: Revenue increased 38% YoY to ₹2,908 Cr, supported by higher electricity sales and improved realizations. • Q2 EBITDA: EBITDA increased 122% YoY to a record ₹421 Cr, up approximately 45% QoQ, supported by higher generation, improved operations and one-time recoveries. • Q2 Profitability: PAT before exceptional items improved to ₹101 Cr from a loss of ₹142 Cr YoY. Reported PAT stood at ₹83 Cr after exceptional items. • H1 FY27 Performance: Revenue increased 35% YoY to ₹5,515 Cr, while EBITDA rose 17% YoY to ₹712 Cr. • Key Risks: Execution of Shakti Unit 2, coal availability, realization of new PPAs, financing requirements for capacity expansion and volatility in merchant electricity prices remain important factors.
VEDANTA POWER LIMITED