Earnings call transcript: Adani Power Q2 2026 revenue beats as profit jumps

Adani Power’s Q2 FY2027 continuing revenue rose 28.5% year on year to INR 17,528 crore and continuing EBITDA increased 18.5% to INR 6,321 crore; PAT climbed 141% to INR 7,019 crore, partly aided by INR 2,422 crore of prior-period revenue. Sales volume rose 11.5% to 26.4 billion units, and CARE Ratings and India Ratings upgraded the company to AA+. Management said 62% of its 24 GW thermal expansion pipeline is covered by long-term PPAs, while peak debt could reach about INR 100,000 crore by FY2030-FY2031; shares rose 1.64% to $185.02.

Analysis

The investable signal is improving cash-flow visibility, not the headline PAT growth. Strip out the retrospective Gujarat tariff recovery and tax credit: reported profit overstates the repeatable run-rate, while continuing EBITDA is the better operating read. Higher PPA coverage reduces merchant-price volatility and should support debt capacity, but also gives up some upside if tight power markets persist. The near-term swing factor is fuel pass-through timing: imported-coal-linked tariff adjustments lag costs, so a further coal rally could compress margins before recovery catches up; Bangladesh-linked billing appears less exposed to that lag. Seasonal hydro normalization is another downside to dispatch and utilization, making this quarter’s operating strength a poor straight-line forecast.

Over 1–3 months, Korba commissioning and remaining PPA awards matter more than the small reported earnings surprise. Over 6–18 months, execution and funding dominate: planned debt growth makes project delays, weaker collections, or ratings stagnation increasingly consequential even if current liquidity is sound. The contrarian risk is treating India’s baseload narrative as automatic equity upside: system demand does not guarantee Adani Power captures attractive tariffs, and the company itself expects normal PLF below this quarter’s level. Verify the local share price and reporting currency before trading; the article’s dollar-denominated figures are not a reliable basis for valuation. Falsify the constructive thesis if continuing EBITDA weakens as coal costs rise, PPA coverage stalls, or Korba slips materially.

Key Decisions for Investors

• Do not chase the earnings-day move. Consider a staged long in Adani Power only after verifying the local listing, price, and valuation against continuing EBITDA; keep sizing modest until fuel pass-through and normalized margins are observable.
• Use Korba’s commercial commissioning and new long-term PPA awards as 1–3 month catalyst checks. Upgrade conviction only on commissioning plus disclosed contracted capacity; a delay or stalled contracting is a reason to stand aside.
• Track quarterly imported-coal costs against realized tariffs, continuing EBITDA, and cash generation. Reduce or exit the constructive view if margin pressure persists beyond the stated tariff-reset lag or net debt accelerates ahead of project delivery.
• Treat the 24 GW pipeline as conditional rather than fully de-risked: monitor capex, peak-debt trajectory, collections, and rating-agency actions. AA+ is supportive, but it does not neutralize refinancing and execution risk as borrowing rises.