JSW Energy Limited analyst Q&A

Thank you very much. We will now begin the question and answer session. Our first question comes from the line of Sumit Kishore from Axis Capital.

My first question is in relation to the Salboni project. Could you outline the PPA details for the first 1,600 MW as well as the subsequent 1,600 MW PPA that you have entered with West Bengal? What is the likely capex phaseout for this mega project? And how do you -- how are you looking to phase out commissioning of these units?

Sumit, thank you very much. The PPA timelines, which are there is from the date of notice to proceed. It's 48 months for the first unit of first phase and second unit after another 6 months, that is 54 months. So all the planning is within the same timelines. We will definitely be completing the Phase 1 within the PPA timelines, which are there. So that we are sure because we have -- our supply chain in terms of boiler, turbine and generator, which is a challenge which country is seeing, as I said in my remarks also, that is all under control. So this is what we wanted to show. And also in terms of the capex - we will be announcing, but yes, you can benchmark - whatever we have said in the domain is that the Phase 1 about ₹16,000 crores of investment for 2 *800 MW which we have announced earlier, so we'll be around that number only.

Okay. And what would be the tariff arrangement here, what fixed , variable, and what are the details?

See, there are two bids. For the first bid the tariff is in the range of ₹3.65, which we have already announced. And the second ₹4.06. This is a fixed charge only. ₹3.6 for Phase 1 and ₹4.06 for Phase 2. Fuel is pass-through.

Fuel is pass-through at what heat rate?

Those things -- those details, we will provide you, but that is as per the guideline, which is there, which is 2350 heat rate.

Sumit, this is Bikash here. We will be happy to connect with you on this, if you want a detailed discussion, we can give a detailed presentation and connect with you.

Okay, Bikash. My second question is on -- you had targeted in the second half of the year to commission about 1.5 GW, if I recollect. And broader question is that given the grid constraints for this financial year now on an organic basis, how much RE capacity, would you be able to close the year by? And for the next financial year, you have a sizable under construction portfolio. So given grid constraints and other challenges, what is doable in FY '27 on an organic basis? And just to close this question, if you could also there's a big ramp -up in capex that we are expecting to see in the coming financial year. So broadly, on an organic basis, your capex this year and the next financial year, how are you thinking about it?

Yes. See, Sumit, one is that, as we have said earlier, you rightly said that 1.5 GW of fresh capacity addition during H2 of current fiscal, out of which 125 MW we have commissioned during quarter 3. So we are well on track. And in the current quarter, the capacity additions, which are going to take place, we will be meeting the guidance what we have given for 1.5 GW in second half of current fiscal. And for which grid connectivity and land, everything, these projects are at advanced stage. Second, for next year, whatever plans we are having, we'll be definitely giving the numbers later. We are in the process of finalizing our next year plans, but of c ourse, keeping in mind the connectivity availability and land, as I've been saying, for quite some time, we are absolutely insulated for next 1 year to 2 years from connectivity challenge. Reason is two steps what we took has secured us from this uncertainty which the country is facing is one is that we have majority of our projects coming next 2 years are STU instead of ISTS. These are intrastate and STU connectivity is available. And second is the O2 acquisition, all capacities which are going to come under that, 100% of the connectivity is available with us to reach the capacity of 4.7 GW. And beyond that, we have to do, there is additional capacity connectivity is available beyond 4.7 GW in O2 also. So these are the factors, which gives us almost certainty that we will not be facing any challenge on these factors. Regarding the capex numbers, as and when we finalize our plan for next year —which we will be doing shortly —we will definitely make the announcement at the right time.

Given connectivity challenges can get commissioned by, say, FY '28 end or so?

See, yes, FY '27 and FY '28, more or less whatever plans we have to reach our 30 GW by 2030, we are on track. And till FY '28, we have absolute clarity of the connectivity also and we will be commissioning as per the PPA because majority of our capacity, the PPAs have been signed, so we are on track to complete everything within the PPA time lines.

Excellent. I'll get back in the queue, thank you and wish you all the best.

Our next question is from the line of Mohit Kumar from ICICI Securities.

Sir, first question related to the PPA, which you tied for in Utkal with Karnataka. I think it's 400 MW -- is 400-MW net capacity, the first subsidiary question. And second is, is it possible to help with the fixed tariff of this particular PPA?

Okay. See, this 400 MW is the net capacity, one. And this is a tariff at ₹5.8 at my plant bus.

And the fixed tariff, sir, of this?

No, no, this is a fixed tariff of ₹5.8. Of course, scalable, but this ₹5.8 tariff is the year 1 tariff, which we are going to get from Karnataka. It is a single tariff. It is fixed plus variable, single tariff bidding, which is there.

For 25 years, is that correct?

Yes.

See, yes, as we have announced earlier, the GE boiler manufacturing plant in Durgapur which we are in the process of acquiring, and we expect the process to be completed and the plant to be fully with us by June or July of '26. So we will be making these boilers for our captive requirement in Durgapur only, which has a capacity of almost about 1.5 boilers of 800-MW -- 1.5 boiler equivalent material to manufacture. And as and when required, we will increase the capacity also there. So we will be manufacturing our own requirement from Durgapur boiler unit only.

Understood. My last question is, sir, what is the progress on conversion of our LOA into PPA? Of course, we have a good pipeline of PPA, but still some of the LOAs on the RE side have been there for quite some time. So what is the kind of conversation happening with the counterparties?

Yes. See, if you see that our total capacity, which is there logged in, it's 12.6 GW of capacity, which is already contracted, already PPA signed, in the RE front, I'm talking.

Yes, sir. My question was more about the pipeline of LOA, which is lying with us for quite some time?

Yes, that is about -- see, there is a total capacity, which is there is about 4.5 GW for which there is pendencies. And some we are expecting shortly to get signed and others, we are waiting, but keeping in mind that our contracted capacity and the PPA signed capacity, the gap is such that we are absolutely certain, the 30 GW number what we are telling by 2030, that is on track.

So Mohit, just to add on what sir mentioned - with our current operational capacity and the projects under construction, we are already at 27.5 GW. In addition, we have a pipeline of 4.5 GW, and the details of that pipeline are already available. There are lots of capacity like this, which is pending closure. So as and when they close out, we will let you know. And we are more than certain that we'll reach 30 GW by 2030.

Our next question is from the line of Rajesh Majumdar from 360 ONE Capital.

Yes. So in line with the questioning earlier, I had a question on the overall quantum of bidding, while you're saying locked-in contracts is fine. But do you foresee a reduction in the total bidding space, particularly in the renewable space next year in terms of the overall market size, in which case, keeping our market share around the same, the level of additions will be limited to about 2.5 to 3 GWs per annum barring the locked in capacity. Is that a fair assumption?

I think, yes, see, there are -- we have to understand that there are 2, 3 challenges, which are being faced. If you see, current year, the capacity with greenfield, as I announced, is extremely low in terms of the bidding which has taken place in the first 9 months. The unsigned PPAs, which are there close to 40 GWs of bids where in the PPA signing is pending, so that is also slowing down the fresh bidding. Second, the uncertainty is in terms of the connectivities, like we are seeing a very good greenfield capacity addition in the current year in the RE space. But will the same numbers continue for next 2, 3 years is a challenge because now from FY '27, we are seeing that the challenge of getting the fresh connectivities will be one of the major bottleneck which is going to be there. So all these factors put together, we definitely see that there will be a moderation in the bidding which we have been seeing till last fiscal, and this is likely to continue.

But even with that, you are saying you will be -- your assumptions assume around 4 GW additions per annum. So that is you still think?

As I told you, you see our present operating capacity, we are ending the year maybe in the range of whatever I say, 14.5, 15 GW and then another about 12 to 13 GW capacity already tied up.

And just to add - the Salboni project of 3,200 MW will come up in 2030 and '31. So it will materialize more towards the end, So it's not the capacity divided by a number of years is what we are trying to say.

Yes. I understand that. My second question is, sir, on the KSK Mahanadi, what is the impact of the tariff reduction on the overall EBITDA per annum? And related question is – in 3Q we are seeing a 30% drop in the stand-alone revenues, is that a reflection of that or is something else?

No. See, the reduction in revenue needs to be understood in the context of extreme weather conditions. There have been reserve shutdowns and backdowns from the states —particularly from Uttar Pradesh—which have led to lower revenue and generation. However, it is important to note that this is a fully tied‑up capacity. My plant availability is ther e, so this is not going to have any significant impact for us. Based on plant availability, we will continue to receive our fixed charges, and we are absolutely certain that this will not be a challenge. You asked one more question?

KSK, tariff reduction. The tariff reduction.

Tariff reduction. Okay. There will be, of course, going forward in FY '27 as per the PPA terms, there will be a tariff reduction of close to about ₹1.25 from one of the DISCOMs, so that will definitely have some impact, but operational efficiencies, as I've said earlier, during the year, we have been building up a lot of operational efficiencies and which have come during the year and kept on coming, so that will give us annualized benefit next year. To some extent, we will be definitely reducing the impact of this tariff reduction from that side. And also the sale of the reserve shutdowns and backdowns from the plants which we have started. So that we are expecting that the impact on the overall EBITDA will be there, but it will be minimal.

What portion of total capacity is impacted by the tariff reduction out of 1,800 MW?

What capacity? 1,000 MWs, which is tied up with UP.

Right, sir. And my last question is when do we see the first tranche of capital coming into the company and kind of -- and also, do you think that with the promoter stake coming in, there is a chance of credit rating improvement in our debt? Yes. That's the last question.

See, the thing is, as I have said, maybe you will see the numbers in December closing, we have sufficient cash flow, free cash with us to take care of our going forward capex which is required in the funds which are required. But as I told you that the capacity whatever capacity addition plans once we finalize for next year, capital requirement, we have the enabling approval to go for the fundraise. As and when during the year, if we feel, definitely, we will be going. But right now, we are comfortable. And because we have got the promoter equity infusion part of that alr eady, which will take us there. And definitely, we expect—just as the market does—that the Promoter increasing their stake at current levels is a positive signal. This is being viewed favourably both by the market and by the rating agencies

And to add on to the rating part, our rating of AA in among the best in the sector. But I really appreciate your point that we will also take it to the rating agencies and upgrade it for our benefit. Thank you very much for this idea.

Our next question is from the line of Apoorva Bahadur from IIFL Capital.

Sir, I was just curious about the Utkal PPA. You said that it was a single part -- single tariff bid. Just wanted to know in case there is a back down for the plant, how do we get paid? As in, will the state pay the entire ₹5.8 tariff or?

Yes. So as I told you, this is the exact tariff is ₹5.78, out of which, the fixed part is ₹4.04 and ₹1.74 variable cost. And if the plant availability is there as per the PPA, my fixed cost is assured.

Okay. Understood, sir. Sure. The other thing, sir, on Salboni, the tariff for Phase 2 is -- the fixed tariff is around, what, ₹0.40 higher than Phase 1.

Yes, yes.

In my understanding, typically, if the plant is larger, there could be utilities, which are -- which is the commonality of utilities and typically, the capex per unit or per MW goes down. So what precipitated this rise in tariffs and was the state okay with it?

Yes, we have to realize –that the first phase of my Salboni project was a year back when the tariff was discovered, the fixed cost. After that, if you see all the bids which have happened have happened even at a higher price. The state is seeing that what is the total cost, and this is still one of the lowest tariffs state is seeing this as 4 into 800. Blended, if you see, it becomes a significantly attractive tariff as compared to the almost 12 GW of bidding which has happened during last 1 year. In thermal space, this is one of the most attractive tariffs. So state is absolutely comfortable and regulatory approval also is in place keeping in mind what has prevailed. We need to know what has happened in other bids in Assam, whether it is Bihar or whether it is MP, you see the states. So this is a very good tariff which has been discovered.

Understood. Sir, I see your presentation, I believe the BESS containerization and cell assembly plant is about to get commissioned. We have certain BESS PPAs as well, which we need to execute. So will we be importing the cells and converting it and containerizing it at our facility for these PPAs?

Yes, exactly. Yes, we are doing that only.

Okay. And have we placed the orders for the cells yet?

Yes, we have placed for some and the materials will start coming because the trial production plant is stabilized. We have submitted our product for necessary approvals, which we expect by March end or early April the approvals to be in place. But by the t ime, we will start the production sometime in February -- between February-March.

Sir, can you share how much of cell capacity or cell import orders that you placed?

Exact number, I will get back to you, I'll let you know. But yes, we understand this, and we have already done the necessary sensitivity analysis. I understand where this concern is coming from, given the northward movement in prices. We have been fully aware of this trend, and accordingly, we have taken the necessary steps at the right time.

Our next question is from the line of Satyadeep Jain from Ambit Capital.

Just wanted to check on RE contracted capacity in the PPA. In the PPA just specifically, can you give an update on FDRE IV, what is happening there?

That battery thing. See, we are waiting for the regulatory approval for the FDRE. We have received the letter. We're waiting for regulatory approval. That is the state. There is no further communication to us from Rajasthan on this.

There is no communication on cancellation or anything as of...

PPA has been signed. We are waiting for the regulatory approval. That's all. Nothing else.

That I know. But the FERC approval is still pending, right?

Yes.

And I just want to understand on the NEP also. The government has been focusing a lot on distribution side. I know historically, that is one area that you're not focused on. Is there -- anything -- are you incrementally looking at that at all or is that a no-go zone for you?

Nothing is no-go for us. We continue to evaluate opportunities as the sector evolves. Now we see a lot of tailwinds in this area also. We are actively assessing various options and closely tracking developments—for example, the privatization process underway in Uttar Pradesh. We are monitoring all such opportunities, and while we will come forward with a concrete plan at the appropriate time.

Yes, we are in the process because efficient capital allocation is also important consideration – That influences how we prioritize opportunities and decide when to move forward or when to step back.

Okay. And on the DSM, just wanted to -- given you also have a very wind-heavy portfolio, have you -- you also obviously commented on that proposal for DSM. I just wanted to understand the government is also talking about DSM being at par with thermal by 2030. What is the implication basis the historical schedule generation you've analysed on your portfolio from DSM tightening?

See, this is an industry-wide issue we have to understand. So as an industry, we are -- definitely, we have taken up and the losses which are there at the industry level because of this is something the pooling and other various other options, which are -- as an industry, we have taken up and wind association is also actively working on these DSM settlement mechanism. It would be relaxed is what we feel, let us wait for some more time on this. But yes, industry has taken this up with the Ministry.

Our next question is from the line of Nikhil from UTI Mutual Fund.

Yes. Just I have a couple of questions. So we have seen a lot of renewable generation getting curtailed in the quarter wanted to understand how much was the impact of it on our financials?

See, the curtailment, which is there, we have to understand that, again, because of the evacuation constraints and especially being witnessed majorly in the state of Rajasthan. So what is happening, there are 2 types of curtailments. One is against the G&A, which is there, that I have the grid connectivity and still the curtailment is there for the grid stability point. And financially, I'm protected because I'm getting the full cost full -- as per the tariff, I'm getting that. A part of our -- a small part of the capacity, which came up early and the connectivity is maybe a few months ahead, we have got the TG&A, which is a temporary connectivity. As and when there is a pressure on the grid, this temporary grid connected -- connectivity gets curtailed wherein there is a financial impact. So our portion is significantly small as compared to the large capacity which we operate. So -- the impact on us is negligible right now. And the positive which has happened, just maybe a week or 10 days back, the new evacuation this connectivity has got started. With this, - the curtailment has significantly reduced, which has benefited us also from the temporary grid - connected portfolio.

Understood. And sir, any understanding also why the wind PL F have been lower because industry-wide, they are a bit better than what we have reported at 16%.

See, the thing is we have to understand the wind portfolio if we see asset to asset. Our wind PLF in fact, has been one of the best and significantly higher than what it was last year. we have to remember that a large portion of my acquired capacity of Myt rah, which is from 850 -kilowatt machine to maybe 2, 2.3 MW of machines. So there, the PLFs are low. Those are low PLFs by design, which all was considered at the time of acquisition, the valuation was done accordingly. So when on a blended basis you see, our PLF on a blended basis may look lower, but on all the fresh capacities which we are commissioning, there the PLF are in line or slightly better than what is there in the country. And going forward, as and when the new capacity is get added, with the newer portfolio percentage of wind increasing in the overall, our overall PLF will also improve.

Understood. Sir, final question on the thermal bid. I mean at ₹4, I mean, the returns that you'll make are very good. So any understanding as to how big can we look at our thermal portfolio, say, 5, 6 years down the line?

See, right now, if you see that the thermal portfolio has a time period of maybe 48 to 54, 60 months to complete the project, the greenfield project. So right now, what we are seeing is that 4 * 800 MWwe have in Salboni, which we are absolutely working on. In addition to that, at KSK when we acquired, another 3 * 600 work, which is already on , is one capex because -- balance of plant was fully ready, parts work of other 3 units were done. So this will be completing additional capacity of 1.8 GW at KSK will be coming at a much lower specific cost, capex as compared to a greenfield and tariffs, as you rightly said, what are prevailing in the market. So we are, right now, next 5 to 6 years, seeing Salboni coming in, KSK addition and maybe if any other good opportunity is there, we’ll be open.

Okay. We have started capex on the additional 1.8 GW at KSK?

Yes, we have started for the fourth unit, which was already 30% to 40% complete when we acquired. And also -- some of the material, which was lying in the port, which we have been able to get after the NCLT order, we have placed the orders and enabling work has started. And now very soon, the entire work will start. And we expect in about 3 years' time, we should be in a position to commission this.

Commission 1 unit or the 3 units?

4th unit and then subsequently every 3 to 6 months the balance 2 units also.

Our next question comes from the line of Atul Tiwari from JPMorgan.

Sir, my question is on industry. So you mentioned that in the first 9 months, we have seen about 12 GWs of thermal bids from states. So to your mind how much more can happen over the next 1 or 2 years from the state? Are we looking at a similar number, higher numbers? And what can be your share potentially for the new thermal projects?

Yes. See, the Government of India has announced 97 GW of capacity addition, fresh capacity commissioning by 2034 -- '32 to '34 period. So in line with that, whatever the pipeline is and balance, so we see some bids, fresh bids definitely will be coming. Some of the states have already given their indication that they are preparing for the bidding. So we expect maybe giving an exact number will be difficult. But yes, definitely, there will be some fresh bids we expect, at least for next 1.5 to 2 years in thermal space will be coming. Regarding us. As I told you that we are absolutely full till 2031, '32, but yes, any attractive opportunity with the sufficient timelines and efficient capital allocation, we will be exploring all the possibilities and decide . Because now we are secured from the material supply point of view, supply chain security with the acquisition of GE boiler plant and placing the Toshiba into -- with Toshiba JSW. So we are secured in terms of the suppliers of BTG, which has been a big constraint for the industry. So we will be evaluating the opportunities as and when the future bids come.

And sir, my second question is on it consol PBT or PAT number, excluding the deferred tax sales. So obviously, your capacity growth has been quite strong and generation and cash flows are good. But your PBT has been under pressure because of depreciation and interest costs down in second quarter, I believe, and this year, it's a loss. So I mean, how do you think about those dynamics as you further ramp up capex and capacity over the next 1, 2 years? Asking because it does impact your repo rted ROEs post depreciation, etc. So is that a target in your calculation at all to get the reported ROEs to a 13%, 14%, 15% kind of number or you are okay to continue at a very suppressed PBT level?

Yes. I'll request Mr. Prabhakaran to just reply to your question.

So currently, we are end up adding capacities. Initially, what happens is that as you add capacities, initially, I think if you look at the returns, it is kind of at a lower rate. And overall, once the interest and depreciation starts coming down, that is the time in which basically you will find the returns at a PBT level. So considering that, since we are in the kind of phase where we are in the execution phase, the next 2, 3 years, we'll have -- and this quarter specifically, we will have anyway a lower PLF, both for wind and solar. So that's a seasonal one. But as and whe n, we kind of stabilize, I think this should kind of even out.

And to add to what Prabhakaran said, we have about 5.2 GW of capacity, which is wind and hydro, right? So that on the third quarter is always muted. So we should actually look at it from -- on a year basis than just looking at 1 quarter.

Ladies and gentlemen, we will take that as a last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everyone, and thanks for being with us today. And again, wish you a very, very happy 2026 and look forward, again, meeting you all. Thank you very much.

Thank you. On behalf of Investec Capital Services, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.