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Adani Power Defies Market Cooling with Robust EBITDA and Capacity Expansion
Adani Power continues to showcase its operational resilience even as the broader Indian power market experiences a temporary cool-off. In its Q3 FY2026 earnings call, the company reported a 5.3% year-on-year revenue decline, primarily due to lower merchant power prices and softer demand caused by an extended monsoon season. Despite these top-line pressures, Adani Power delivered a robust EBITDA of INR 4,636 crore, proving that its focus on cost efficiency and long-term contracts is paying off.
The real story this quarter, however, is the aggressive march toward the company’s long-term goal of 42 GW capacity by 2031. With the acquisition of the Vidarbha plant and the full operationalization of the 600 MW Butibori plant, Adani’s installed capacity has climbed to 18.15 GW. Management is clearly pivoting away from the volatility of the merchant market, with 90% of its current operating fleet now tied up under long-term or medium-term Power Purchase Agreements (PPAs). This strategic shift provides a significant “moat” against price swings and ensures highly visible, stable cash flows for the years ahead.
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Key Financial Highlights
While revenue saw a slight dip, the underlying profitability remains healthy due to improved operational leverage and lower fuel costs.
- Consolidated Revenue: INR 12,717 crore, down 5.3% YoY from INR 13,434 crore.
- EBITDA: INR 4,636 crore, remaining robust despite the revenue decline.
- Net Profit (PAT): INR 2,488 crore, compared to INR 2,940 crore in the same period last year.
- Fuel Costs: Decreased by 9.7% to INR 6,800 crore, aided by a reduction in international coal prices.
- Net Debt: Stood at INR 38,679 crore, with leverage remaining at “comfortable” levels according to management.
- Prior Period Income: Noted at INR 278 crore, a significant drop from the INR 1,400 crore recognized in Q3 last year, which explains the lower reported PAT.
Operational and Segment Breakdown
Adani Power is successfully balancing its legacy assets while integrating newly acquired plants into its high-efficiency network.
Capacity and Sales Momentum
The company’s installed capacity reached 18.15 GW, a step up from last year following the Vidarbha plant acquisition. Despite a lower Plant Load Factor (PLF) of 62.6% (down from 63.9% last year due to weaker seasonal demand), power sales actually increased slightly to 23.6 billion units. This growth in sales despite lower utilization highlights the scale benefit of the company’s expanding fleet.
Strategic PPA Tie-ups
The move toward “contracted certainty” is accelerating. A major highlight was receiving the Letter of Award for a 3,200 MW project in Assam, to be developed under the DBFOO model. Currently, half of the company’s upcoming expansion capacity is already tied up under long-term PPAs. These new-age PPAs are structured to generate EBITDA based on plant availability, with fuel charges acting as a complete “pass-through,” effectively insulating the company from coal price volatility.
The Butibori Turnaround
Management highlighted the successful restart of the 600 MW Butibori plant, which had been shut down for several years before Adani acquired it in July 2025. It is now fully operational and supplying power under a 5-year PPA with the Maharashtra DISCOM. This demonstrates Adani’s “specialty” in reviving distressed power assets and quickly integrating them into the grid.
Management Commentary and Strategic Direction
The tone from CFO Dilip Jha was one of long-term confidence, dismissing short-term market fluctuations as “transient”.
“Our operations remain resilient due to our fuel logistics cost advantages, long-term tie-ups, and competitive merit order position in most PPAs.” Dilip Jha, CFO
Our take: This emphasizes Adani’s competitive advantage. By controlling the fuel logistics and maintaining a high position in the “merit order” (the sequence in which power plants are called to supply the grid), Adani ensures its plants are among the first to be utilized, even when overall demand is soft.
“The new PPAs have much better higher capacity charges than our legacy PPAs. This will lead to much better per megawatt EBITDA in the coming years.” Dilip Jha, CFO
Our take: This is a key insight for investors. It suggests that even if revenue stays flat, the “quality” of that revenue is improving. Higher capacity charges mean the company gets paid more simply for being “ready to supply,” which is a much higher-margin business than selling power on the spot market.
Guidance and Outlook
The roadmap for Adani Power is clearly defined by its massive construction pipeline:
- Capacity Target: On track to move from 18.15 GW to 42 GW by 2031-32.
- Project Timelines: Mahan Phase 1 is 80% complete, while Raipur Phase 2 and Raigarh Phase 2 are progressing at 44% and 38% respectively. Commissioning for these is expected to start in FY2027.
- Bidding Pipeline: The company is currently participating in bids for an additional 15 GW to fill its remaining capacity targets.
- Demand Recovery: Management expects a return to “strong power demand” in the coming year as the base effect of the last two years stabilizes.
Positives to Watch
- Contractual Revenue Visibility: With 90% of current capacity under PPAs, the company is largely shielded from the “sharp” declines seen in market clearing prices.
- Cost of Funds Optimization: The company recently raised INR 7,500 crore via NCDs with coupons as low as 8%, reflecting strong credit market confidence and a stable AA rating.
- Fuel Security: Linkages under the SHAKTI policy for new projects ensure that fuel supply the biggest headache for thermal plants is largely secured.
Risks and Concerns
- Merchant Price Volatility: While the company is reducing exposure, the portion of power sold on the merchant market is seeing significant “downward pressure” on realizations.
- Receivables from International Markets: While management stated that “timely payments” are being received from Bangladesh, any geopolitical or economic shift in the region remains a localized risk factor for the Godda plant.
- Execution Risk: Scaling from 18 GW to 42 GW is a massive undertaking. Any delays in the “advanced equipment ordering” or construction phases could push back the EBITDA growth anticipated from FY2027 onwards.
Capital Allocation
Adani Power is currently in a “heavy investment” cycle, but it is funding this growth through a mix of internal cash and strategic debt.
- Internal Accruals: A majority of the CapEx is planned to be funded through internal cash generation.
- Strategic Financing: The use of bridge financing for CapEx has led to a slight increase in total debt to INR 45,331 crore, but management insists this is temporary and supported by “excellent liquidity”.
Analyst Q&A Insights
Question: What are the specific tariffs for the newly awarded Assam and Karnataka PPAs?
Answer: For the 3,200 MW Assam PPA, the fixed capacity charge is INR 4.16 per unit. For the Karnataka PPA, the total tariff is INR 5.78 per unit, with a fixed component of INR 4.05.
Our take: These fixed charges are significantly higher than older PPAs, confirming management’s claim that the “new” business is much more profitable than the “legacy” business.
Question: Where do we stand on CapEx for this year versus the INR 130 billion estimate?
Answer: Management confirmed they are on track with their expansion program. Mahan is the most advanced at 80% completion, and the resumed work at Korba Phase Two adds another layer to the growth pipeline.
Our take: The resumption of the Korba project is a positive surprise, suggesting that any prior regulatory or logistical hurdles there have been cleared.
Question: Are there any concerns regarding payments from the Bangladesh power project?
Answer: Management was firm that they continue to maintain “strong liquidity” and receive timely payments from all customers, specifically mentioning Bangladesh.
Our take: This addresses one of the biggest “market fears” surrounding Adani Power. By stating that payments are timely, they are signaling that the cross-border risk is currently being managed successfully.
Key Takeaway
Adani Power is successfully navigating a “soft” quarter by leaning on its long-term contracts and operational scale. The headline revenue decline is a distraction from the real story: a massive, well-funded capacity expansion that is being locked into high-margin, fixed-price contracts. If the company hits its FY2027 commissioning targets, the “per megawatt EBITDA” is poised for a significant structural jump. For now, the focus remains on execution and maintaining the strong AA credit profile while the “growth engine” builds up steam.
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