Adani Power’s Q2 Earnings: Profit Dips Despite Marginal Revenue Growth

New Delhi: Adani Power, one of India’s largest private thermal power producers, has reported a mixed performance for the second quarter of the current financial year. The company saw a consolidation in its top line but faced pressure on profitability, with its consolidated net profit declining by 11% year-on-year (YoY).

The financial results released on Thursday indicated that the power major’s net profit for the July-September quarter stood at ₹2,953 crore, down from ₹3,332 crore reported in the corresponding period of the previous fiscal year. This decline in the bottom line was particularly notable as it came despite a slight increase in operating revenue.

Marginal Revenue Growth

On the revenue front, the company managed a marginal rise of approximately 1%, with the total revenue from operations advancing to ₹13,457 crore in Q2, up from ₹13,339 crore a year earlier. This modest increase suggests that while the volume of power sold may have been higher, the company faced challenges in tariff realisation, possibly due to a dip in merchant tariffs or fluctuations in the price of imported coal.

EBITDA and Margin Compression

The operational profitability, as measured by Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), also saw a slight contraction, dropping by 2% to ₹5,150 crore from ₹5,276 crore in the year-ago period.

• The EBITDA margin consequently experienced a compression, shrinking by about 130 basis points to settle at 38.27% compared to 39.55% in Q2 of the last fiscal.
• The primary factor behind the pressure on net profit and EBITDA appears to be a rise in total expenditure, which increased by approximately 4% to ₹10,342 crore in the quarter under review, up from ₹9,929 crore last year. This increase in costs, which includes fuel expenses, weighed down the profitability metrics.

Management Commentary and Future Outlook

The company’s management, however, expressed confidence in the firm’s underlying operational strength and long-term strategy. S B Khyalia, CEO of Adani Power Limited, highlighted the company’s robust and stable financial performance, which was sustained “in the face of weather-driven fluctuations in demand.”

He further pointed out the strategic progress being made, including:

• Capacity Expansion: The company’s consolidated operating capacity grew to 18,150 MW as of September 30, following the acquisition of a 600 MW capacity from Vidarbha Industries Power Ltd. Adani Power is pursuing an enhanced capacity expansion goal of 42 GW by 2031-32, with equipment and land for a 23.7 GW expansion already arranged and project implementation progressing rapidly.
• Long-Term PPAs: The company is actively expanding its market presence by securing new long-term Power Purchase Agreements (PPAs) under the government’s SHAKTI scheme, securing another 4.5 GW of new PPAs during the quarter.

Adani Power’s results reflect the complex dynamics within the Indian power sector, where marginal revenue growth indicates steady demand but rising operational costs, especially expenditure, put a tight squeeze on immediate-term profitability.