Torrent Power Limited analyst Q&A

The first question is from the line of Mohit Kumar from ICICI Securities.

My first question is of course this quarter was impacted by the lower merchant prices and lower offtake for the gas-based power plant. But is it fair to say that we are guaranteed a certain amount of payment for that till October under the existing PPA, so the Q2 should be better compared to last year. Is that a fair assumption?

So see, the quarter has been impacted mainly by the merchant sales because of the early onset of monsoon as well as elevated gas price. So our NVVN tender, which is operational from 15th of March and will be continued till 15th of October. So it will be split into two quarters. So whatever supply has not happened under NVVN tender will going to happen -- going forward in Q2, possibly something may spill over the Q3 also.

Understood, sir. My second question is on the RE portfolio. Is it possible to spell out the capex which you have done for the Q1?

Q1 capex is about INR350 crores.

And how do you expect it to progress the balance year, sir?

Balance, there is a plan. We have a plan. So we have plan to have about 500 to 700 MW capacity coming in. So progressively, we'll incur the capex for the RE portfolio.

Any broad number for fiscal year '26 and '27, sir? Is it possible to share?

Sorry?

So for '26, it should be around INR7,000 crores to INR8,000 crores for this year and slightly higher number for next year.

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

First, on the merchant EBITDA for the quarter. I just wanted to understand the PLF was low, but under the NVVN tender, you have minimum guaranteed offtake. So was there some EBITDA contribution this quarter from take -or-pay where even if NVVN doesn't lift, you are guaranteed fixed cost on whatever is not lifted. So just wanted to unders tand, was there some contribution from there in this quarter?

The contribution from merchant is there definitely because of the NVVN, we have lifted some portion. But it will be -- whatever is a guaranteed thing is going to happen next quarter as well as something spillover will happen in the Q3 also. So minimum guaranteed quantity is going to happen.

Just trying to understand, there will be some guaranteed offtake every day. I think last time we were trying to understand, what I understood was if they don't lift the minimum guaranteed offtake, which would be 2,300 MU, you would -- they will not pay you the entire tariff, but you will be guaranteed at least a fixed cost. So just trying to understand this quarter.

So Satyadeep, I think what you're trying to understand is that this quarter, what was the minimum guaranteed offtake and correspondingly, what was the realization from that. So basically, this tender is for -- until October, right? So the guaranteed offtak e they have to take is till October. Now it is not split into every day demand, every -- so if, let's say, on a particular day, if the demand is not there, they may not commission or they may not ask you to provide power. It can spill over to a different day. So basically, what we are saying is that there was some offtake under the NVVN tender and the expectation is that minimum guaranteed offtake will be taken by NVVN going forward progressively. There could be -- there is a possibility that some guaranteed offtake may also get spilled over from October to the next quarter also.

Because my understanding in the tender was there are specific crunch days 111. And during those crunch days, there is a minimum PLF of 50% during non-peak and 100% during peak. So accounting-wise, I thought whenever they're not meeting within this quarter also, you would have booked some fixed cost recovery, but that...

No, we book based on the sales, which happens, right? And what you're saying should be true in case once the period expires and they have not offtaken the minimum guaranteed. Then we'll have to see whether we want to account that for not. But as of now, whatever we have booked is based on the offtake which they have done -- based on the actual offtake we have done. Not based on some estimated number, but based on the actual offtake, we have booked the revenues and contributions.

Fair enough. Just one thing I noticed in the presentation, some merchant wind capacity you had. Is it -- seems like you've transitioned that into SECI XVIII. What is the rationale? Because earlier you were thinking of keeping some merchant winds in the portfolio. It seems to have been gone down. Is that true? And what is the rationale for that?

So we have two merchant projects, in fact, developing. So we got the SECI XVIII tender. So we have shifted the tariff was INR3.97, which is quite good, I would say. So we have shifted the merchant capacity under SECI XVIII tender. So that is what -because tariff was good INR3.97 in the SECI XVIII tender. So better to switch over this merchant capacity to SECI and contract lock in at better tariff, and we will develop further merchant capacity going forward also.

Just one quick question, if I can squeeze another one. On the parallel licensing, I think there is some news report indicating some capex opportunity in Nagpur. I think there is some hearing. Just wanted to understand the steps in that process right now. And I think the news reports indicate maybe PAT losses for the first 4 years. Just wanted to understand why -- is that -- I'm not sure if it was misquoted or something. Why - - if that is, why should there be PAT losses in the first 4 years? If you can you talk about this opportunity, the steps -- and I'm not sure whatever the media reports are. Just wanted to understand your thoughts there?

So we can't comment on the media report, but the fact of the matter is that today, in fact, today is the public hearing happened in Mumbai organized by the MERC. So that happened today. Now we have reserved the orders now. So it will be probably going to be announced in a couple of days, I would say. And then we will come to know the exact status about the current licensing. So public hearing took place today in Mumbai.

So the results of the public hearing will be announced in 2 days. What are the steps after that?

A couple of days, not two days -- a couple of days. They will reserve the order whether to allocate -- to give the circle to the Torrent Power or not based on the public hearing.

Okay. So within a few -- within a couple of days or so, we should find out.

Yes, that is what we expect to MERC. Maharastra State Regulatory Commission will announce the result.

MERC. All the three, right? Pune, Nagpur -- all the three areas.

Yes, all the three areas.

The next question is from the line of Sumit Kishore from Axis Capital.

Could you give us a sense of what is the total sale of merchant units in Q1? And what was your merchant contribution from gas -based power plants in the first quarter of the year? Our sense last year was that in Q1 last year, you had realized almost INR6 billion of merchant gains.

So it was a merchant sale of about 714 MUs this quarter.

714 MUs, including the NVVN tender also. Contribution was about INR327 crores.

Got it. This is very clear. The second question is, I think you mentioned to a previous participant that Q1 capex was INR3.5 billion only. I thought that you are...

INR350 crores for the renewable only. Overall capex is about INR850 crores, but the renewable is INR350 crores.

So total company level capex was INR850 crores, out of which renewable was INR350 crores.

Okay. Just to understand, given the numbers that we are looking at on an annual basis are north of INR70 billion, INR80 billion. So is there any reason why Q1 capex in renewable is so low? Or how should we read this sort of number seems quite low.

Yes, it will be ramp up in the Q2 -- H2, I would say, significantly as compared with H1.

Okay. And in addition to the 2 GW Maharashtra PSP, now the total PSP that you're showing is 3 GW. So...

2 GW is tied up with MSEDCL and 1 GW we are planning on a merchant basis, which will be tied up at some point of time. And as of now, we are developing 3 GW capacity, PSP capacity.

Okay. So that 1 GW merchant is at the same location?

Yes, same location because location is a 3 GW capacity, out of which 2 GW we have tied up the MSEDCL.

The next question is from the line of Suyash Jain from NDTV Profit. As there is no response from the participant, we will move to the next one. The next participant is Chetan Jain from Avendus Spark.

Sir, just a follow -up on the previous question. You said your EBITDA contribution from merchant was around INR327 crores. Does this include the LNG sale also?

LNG sales.

So basically, when we say merchant, it includes LNG and MU sales also, both.

Okay. Sir, any number -- what is the comparable number for the same for the previous quarter - - previous year?

It's basically -- we don't give the breakup, it's interchangeable between -- depending upon the opportunities available.

Just the comparable number for first quarter FY '25 for the same INR327 crores.

INR660 crores, okay. Sir, my next question is on what would be your average realization for this quarter, sir, realization and EBITDA for this quarter, average realization for 700 MUs which we sold?

So we have 714 MUs we have sold in the merchant market and contribution of INR327 crores.

Around INR4.50.

INR4.50. Okay, sir. So just last question is on -- we read a news report or media report on a company interested look at L&T's power asset. Any comments on that, sir?

No, we don't want to give comment on this. We don't want to give any comments on this at this moment.

But are we looking at thermal assets? Are we always looking at thermal assets on a regular entity basis?

It's a part of our strategy, yes, we look at the thermal coal asset also, developing coal asset or participating in the IBC process also that -- it's a continuous exercise. We think we most of the acquisitions in the renewable side also in the coal side also.

The next question is from the line of Bharani V. from Avendus Spark. Bharani V. Yes. So can you give an update on the UP DISCOM privatization and where is the process at? When do we expect the bids to be opened?

It's too early because government is working at the RFP. So that is what currently theyare working. So it's -- that is what the stage is currently. But we are definitely interested in participating in the tenders as and when it comes. But currently, the proposal is under finalization by the UP government. Bharani V. Okay. Okay. And my second question is on DGEN. Like if I look at the 1Q FY '26 PLF reported, which is 21%, translates to around 2,300 million units of generation. So just trying to understand if we have sold about 714 million in merchant, what are the othe r units being sold, where is it sold to? Is it being sold to the distribution circle in Ahmedabad, Surat?

So I think you are considering this MUs on an annual basis. Divide it by 4 quarters.

I think you were looking at annual MUs, not the quarterly MUs. Bharani V. Okay. Sorry, yes. That's a mistake. Yes, you're right. Like I was calculating on other plant. Got it. And finally, on the fact that how much would be the amount of units we are expecting to sell from or to put it another way in merchant market in the second quarter?

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

So just one question, clarity on the NVVN tender. So is it fair to assume that the fixed cost related to the NVVN tender relating to 2.3 billion units of minimum offtake will be fully -- will get fully booked by end of Q3?

So contract is currently running up to 15th of October. But depending upon the demand from their side, it's not fully utilized by that date, government may extend some portion. But we can safely assume that by Q3, it should get fully utilized.

Okay. Fully utilized. Okay. And if it doesn't get utilized, we'll be...

Will get the minimum offtake fixed cost.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Saurabh Mashruwala for closing comments.

Thank you, everybody, for joining Torrent Power ’s Earning Call. Thank you very much. We wish everybody to stay safe and healthy. Thank you so much. Thank you.

Thank you. On behalf of Torrent Power Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.