Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adani Green Energy Ltd (BOM:541450, Financial) reported a 24% year-on-year increase in revenue from power supply, reaching INR2,528 crores.
- The company's EBITDA from power supply increased by 23% to INR2,374 crores, with an industry-leading EBITDA margin of 92.6%.
- Adani Green Energy Ltd (BOM:541450) operationalized a 250-megawatt wind power capacity at Khavda, equipped with India's largest onshore wind turbine generator.
- The company has a robust capacity addition of 2.6 gigawatts over the past year, contributing to a 22% increase in energy sales to 7,356 million units.
- India Ratings and Research upgraded Adani Green Energy Ltd (BOM:541450)'s long-term issuer rating to AA- from A+, reflecting strong operational performance and healthy cash flows.
Negative Points
- The company's wind plant availability is around 97%, which is lower than the solar plant availability of upwards of 99%.
- Adani Green Energy Ltd (BOM:541450) faces challenges in achieving higher wind plant availability, although improvements are expected.
- The average borrowing cost for new projects is between 8.6% to 8.9%, which, while lower than previous rates, still represents a significant financial burden.
- The company needs to manage a substantial CapEx of INR240,000 crores (approximately $30 billion) to achieve its 50 gigawatt target by 2030.
- Adani Green Energy Ltd (BOM:541450) has a significant portion of its future capacity tied to merchant and C&I markets, which can be volatile and less predictable compared to long-term PPAs.
Q & A Highlights
Highlights from Adani Green Energy Ltd (BOM:541450) Q1 FY25 Earnings Call
Q: What is your expectation of exit capacity for end of FY25 and '26 and what should be the mix between wind and solar?
A: By the end of this year, we are projecting an additional 6 gigawatt capacity, with a majority targeted towards solar in both Rajasthan and Khavda. We expect close to 700 megawatts of additional wind capacity for the rest of the year. (Amit Singh, CEO)
Q: What is the current borrowing cost that you are experiencing for the new projects?
A: Last year, our average borrowing cost was 9.4%. Recently, fresh borrowings are between 8.6% to 8.9%, and refinancing projects are at levels even lower than 8.6%. (Phuntsok Wangyal, CFO)
Q: What is the average realization you're getting on the merchant part of the business?
A: Wind pricing has been strong, with north of INR5.5 price realization. For solar, we are expecting INR4 to INR4.5 price realization in the near term. (Amit Singh, CEO)
Q: Can you comment on the CapEx difference between open loop and closed loop systems for pump storage?
A: The cost for our 5,700 megawatt capacity is around INR4.5 crores per megawatt. We have ensured that our sites are among the best in terms of CapEx intensity and have minimal environmental impact. (Raj Jain, Head of Business Development)
Q: What is the total CapEx for achieving the 50 gigawatt target by 2030?
A: The total CapEx will be in excess of INR240,000 crores, including pump storage, which translates to approximately $30 billion. (Amit Singh, CEO)
Q: What proportion of the total installed capacity would be merchant plus C&I by the end of FY25?
A: By the end of this year, close to 1,800 megawatts will be merchant, predominantly wind. We expect around 2,400 megawatts in total merchant capacity out of a 17 gigawatt total capacity. (Raj Jain, Head of Business Development)
Q: What role will Adani Green have in carbon markets, and how will it add to your cash flow stream?
A: We are registering projects under gold standard and UNFCC regimes, benefiting from carbon credit sales. We also transact RACs with customers aiming to decarbonize. The government's enforcement of carbon efficiency programs and RPO obligations will drive growth in this area. (Amit Singh, CEO)
Q: What was the broad PLF in the first quarter for Khavda operations, and how much time will it take to reach the optimum level?
A: We have already started seeing 33% and above PLF in one of the blocks. We are confident of achieving and possibly exceeding this number as we stabilize operations. (Amit Singh, CEO)
Q: What sort of tariff are you expecting for the pump storage projects?
A: Baseline tariffs are around INR3.8 to INR4.5. We plan to combine pump storage with solar and wind for C&I projects, aiming for higher pricing. (Amit Singh, CEO)
Q: How do you maximize benefit from merchant sales of solar power given the potential for lower prices during peak generation times?
A: We optimize by combining solar with wind and pump storage, leveraging ISTS waivers, and targeting C&I deals that require firm power with high CUF. This approach helps us monetize effectively despite daytime price fluctuations. (Amit Singh, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
