JSW Energy Ltd (JSWENERGY) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Good day, and welcome to JSW Energy's Q2 FY24 Earnings Conference Call.
Moderator: Ladies and gentlemen, good day, and welcome to the Q2 FY '27 earnings call of JSW Energy, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Eshan Verma from Antique Stock Broking Limited. Thank you, and over to you.
Eshan Verma (Antique Stock Broking Limited): Thank you, ma'am. Good afternoon, everyone. On behalf of Antique Stock Broking, I welcome you all to the 2Q FY '27 results conference call of JSW Energy Limited. We have with us today from the management, Mr. Sharad Mahendra, Joint MD and CEO; Mr. Chandrasekharan Prabhakaran, CFO; and Mr. Bikash Chowdhury, Head of Investor Relations and GRM. We will begin with the brief opening remarks from the management, followed by the Q&A session. Thank you, and over to you, Sharad sir.
Sharad Mahendra (JSW Energy Ltd): Yeah. Thank you, Eshan. Good evening, everyone, and thank you for joining us for JSW Energy's Q2 FY '27 earnings call. I hope you and your families are keeping well. At the outset, let me start with the fact that the fundamentals of our sector have never looked this stronger. If I were to sum up this quarter in one line, it would be this: the market is moving towards exactly what we have been building. Three themes defined the sector over the last three months. Demand kept beating expectations on the back of strong economy. Energy security moved to the center of the national agenda, and the procurement shifted decisively towards firm reliable power. Let me take each of these in turn and then show you how JSW Energy is positioned on each. The first is demand, and it rests on resilient economy. India continues to be among the fastest growing major economies in the world. Real GDP grew 7.8% year-on-year in quarter one of FY '27, and the RBI expects growth to remain robust at 7.1% for FY '27. High-frequency indicators point to sustained momentum. The Index of Industrial Production grew 8% year-on-year in August. PMIs rebounded in September to 55.1 for manufacturing and 55.2 for services, well within expansion territory, and GST collections rose above 7.7% year-on-year to INR 6.15 trillion in quarter two of FY '27. This economic momentum is translating directly into electricity consumption. Power demand in quarter two FY '27 grew 11.1% year-on-year, building on 8.3% growth witnessed in quarter one. September alone grew about 11.3% with peak demand touching 270 gigawatt in quarter two of FY '27. The momentum is strengthened further in October with month-to-date demand growth of 21.2% and year-till-date demand growth of almost 11.4%. Part of this is weather, as monsoon was about 13% below normal in quarter two, and cooling demand stayed high well into the evenings. But the large drivers are structural and, in our view, durable. Industrialization, urbanization, rising per capita consumption and new sources of load such as data centers, electric mobility. These support our view of 5% to 6% long-term CAGR in power demand, and the last two quarters suggest that view may prove conservative. The second theme is energy security. The ongoing conflict in the Middle East has disrupted LNG and crude flows through the Strait of Hormuz, tightened global energy markets, and pushed utilities across Asia back towards coal. For India, the priority is clear: secure, domestically sourced dispatchable power backed by a domestic manufacturing base is no longer an option, it is a strategic necessity. The sharp rise in imported coal prices has significantly impacted fuel cost across the sector. API 4 benchmark coal prices average close to $115 per ton in quarter two of FY '27, up around 28% year-on-year from $90 per ton. Despite this increase, our transition to domestic coal
Sharad Mahendra (JSW Energy Ltd): price volatility and has enabled us to effectively mitigate the impact and maintain cost competitiveness. Domestic supply has also tightened. Coal stocks at power plants fell to multi-years low. And in October, around 96 plants were classified as critical, holding an average of six to seven days of stock against the normative 19 to 20 days. Tight fuel supply coupled with robust demand flowed directly through to the power exchanges. Day-ahead market prices averaged ₹5.70 per unit in quarter two of FY '27. As compared to this, our merchant realization, however, stood at ₹6.90 per unit, which was around 20% higher than the DAM average. This is driven by the strategic bilateral contracts we have entered into. The third theme is the shift towards firm power. On the supply side, capacity addition continues at a record pace. India added about 23.9 GW of renewables in the first half of FY '27, including 20.8 GW of solar, taking non-fossil fossil capacity past 300 GW. On the thermal side, about 3.3 GW was net commissioned in H1 with about 39 GW under construction. With the more telling signal is in the bidding. Renewables still dominate new capacity additions, yet procurement is shifting decisively towards firm and dispatchable capacity. FDRE, solar plus storage, standalone batteries, and notably, long-term thermal. States awarded around 17 GW of long-term thermal capacities at tariffs of about ₹5.40 to ₹6.30 per unit in FY '26, and a further and a further 18 GW of thermal tenders are currently under bidding. To us, the conclusion is simple. Renewables and thermal are not competing. They're complementary. Renewables deliver the cheapest energy, while thermal and storage keeps the light on through the evening peaks. Let me connect each of these three themes, demand, energy security, and firm power, to what we executed during this quarter, past quarter gone by. Since April, we have commissioned 1.4 GW of organic renewable capacity as compared to last full year's approximately 1.2 GW. This is also nearly half of our FY '27 guidance of 3 GW. In Q2, we added 513 MW, comprising 301 MW of solar and 212 MW of hybrid capacity. Including the 300 MW Maruti thermal acquisition, total capacity addition since April stands at 1.7 GW, taking our installed capacity to above 15.1 GW with renewables accounting for approximately 61% of the portfolio. Of the remaining 1.6 GW to be commissioned during the year, we are fully on track. Land and transmission connectivity are secured. Equipment is either on-site or in transit, and off-take off-take is backed by long-term power purchase agreements. The pipeline is substantially de-risked, and we are confident of achieving our 3 GW commissioning target of FY '27, supported by planned CapEx of around 20,000 crores. Further on our energy storage pursuits, we expect to commission about 1 GWh of battery energy storage projects in FY '27. We are also enthused by the sizable C&I opportunity in the market and particularly by the opportunity within our own group as its companies pursue pursue ambitious growth plans. Our installed C&I portfolio, including group captive, stands at 3.7 GW, about 25% of our total operating capacity. We expect it to grow to over 8.5 GW by 2030 with group companies contributing a large share. JSW Energy has long been the energy partner of choice for the JSW Group, meeting around 3 GW of round-the-clock thermal and renewable power demand across group companies. That partnership has the potential to have a significant step-up. With JSW Steel planning to expand capacity to up to 80 million tonnes per annum and other group businesses scaling rapidly, the group's RTC power requirement is expected to more than double to around 7 GW by 2032. A substantial share of this will be met through green energy in line with the group's decarbonization ambitions ambitions. We have already laid the ground
Sharad Mahendra (JSW Energy Ltd): to capture this demand. Of the 6.2 GW of MOUs signed with the group companies in quarter 2 of FY24, 4.5 GW is yet to be tied up, and 2 GW of this is under advanced discussion. This represents a large, visible, and high-quality growth pipeline with certainty. JSW Energy is well positioned to serve as an integrated energy partner to the group and to the wider industrial market, delivering reliable, round-the-clock, and increasingly green power at scale. This will add a strong layer of long-term assured demand to our growth trajectory. Looking further ahead, our locked-in pipeline gives us clear line of sight to our 30 GW target for 2030, and our growth runway extends well beyond it. Multiple drivers support our growth beyond 2030. The Salboni thermal project, the 950 MW Kuri/Gongri Hydro project, Bhutan hydro project, our first cross-border generation venture being developed in partnership with Druk Green Power Corporation Bhutan, Bhutan's state-owned utility, and further thermal and C&I opportunities. Meanwhile, our sizable pump pump storage pipeline of 26.4 GWh remains on track. Moving ahead, as the market pays more for firm power, we have strengthened our thermal platform in two ways. First, by buying value. We completed the acquisition of Maruti Clean Coal and Power in August at an enterprise value of 1,410 crores. It is EBITDA and PAT accretive from day one and lowers our net leverage. About 195 MW of this capacity is tied up under a long-term power purchase agreement with Rajasthan Discoms, of which around 14 years of residual life is there, while about 64 MW gives us merchant exposure at a time of strong prices. In Q2, this plant generated about 45 crores of EBITDA in just 55 days from our acquisition on August 6th and to the till the end of the quarter. Second, by building at low cost. At Salboni, turbine generator orders for all 4 800 MW units, totaling 3.2 GW, are now in place, with the phase 2 turbines ordered from Toshiba JSW in September. Site work on phase 1 is progressing well, and the first unit is expected to be commissioned in 2030. At KSK, the 600 MW fourth unit remains on track for FY28 commissioning, and balance 1,200 MW commissioning scheduled in FY29. On fuel, our continued shift to domestic coal has insulated us from the rise in imported prices, as I said earlier. Recently acquired Maruti thermal plant is also fully domestically fueled through a long-term fuel supply agreement with SECL and linkage under SHAKTI scheme. Coming on to our thermal growth ambition, as you know, we raised our stake in Toshiba JSW Power Systems to 10.7% in July. The scheme to acquire GE Power India's boiler business, including its Durgapur manufacturing unit facilities, received NCLT sanction on 1st of October, and the transaction is expected to be closed very soon. We have placed the boiler order for the entire Salboni project with the Durgapur facility, which sits in the same state as the project. With turbines from Toshiba JSW and boilers from our own facility, we now control the critical path of our thermal build-out at one of the lowest capital costs in the industry, and on one of the shortest timelines. The same logic applies to renewables. Our Halol wing blade facility has been producing blades for our wind projects since its commissioning in June, and the Chitradurga facility remains on track for completion and commissioning in quarter 3, current quarter of FY27. Further, I am also pleased to share that ICRA and India Ratings have affirmed JSW Energy's long-term credit rating at AA with a stable outlook. This recognizes our larger and more diversified operating base, our high share of contracted capacity, and the deleveraging we delivered through the 10,150 crores of capital unlocking in the current in this calendar year. A stronger rating directly helps contain our cost of capital as we fund our ongoing leg of growth. I would also like to address curtailment, an issue the sector as a whole is grappling with. Curtailment across
Sharad Mahendra (JSW Energy Ltd): portfolio stood at 4.8% of the total generation in H1, which is lower than what the national-level curtailment of about 5.4% % has been witnessed. And this has been possible primarily because of the diversified asset base rather than having majority of the assets in the areas where the curtailment is being witnessed more. In Q2, our curtailed units stood at 225 million units with a revenue impact of rupees 59 crores. Further, 60 about 60% of our curt- curtailed capacity currently on temporary grid network access will move to permanent GNA by end of current quarter, which is quarter 3 of FY27, and it will significantly re- reduce our exposure meaningfully towards this curtailment. Our growing renewable portfolio also helped us avoid about 13 million tonnes of CO2 emission in H1 of FY27 and about 8.4 million tonnes in quarter 2 of FY27 based on the prevailing Indian grid emission factor. Now coming to our quarter 2 operational performance. Net generation of quarter 2 FY27 increased by 17% year-on-year to 17.5 billion units, driven by robust capacity addition and healthy plant performance. On hydro, the monsoon was weaker this year, and and all-India hydro generation declined about 15% year-on-year in quarter 2. Our plants held up well against this backdrop, helped by their location in Sutlej and Ravi basins, which out which outperformed the national trend. In the Sutlej basin, Karcham Wangtoo and Baspa did broadly comparable to the basin, operating at consolidated PLF of 90%. In the Ravi basin, where our Kutehr plant is, the generation rose about 14%. Kutehr more than doubled its generation to about 408 million units in its first full monsoon season at a PLF of about 78%. Our Ti- Tidong plant, which was commissioned in quarter 1 FY27, much before the scheduled timeline of October 26, gave us a healthy advantage of ongoing hydro season. The plant generated 199 MUs in quarter 2 at a PLF of 61%. Overall, driven by incremental generation for from Kutehr and Tidong, our hydro generation was 3,421 million units, up 13% year-on-year. On thermal, generation was 8.9 billion units, up 13% year-on-year, including 321 million units from the newly acquired Maruti plant. Our consolidated thermal PLF was 75% in quarter 2 against all-India thermal PLF of 67.8%. Mahanadi plant operated at 90% PLF. Utkal con- continued stable supply under its PPAs with Karnataka and Assam at a PLF of 82%. Utkal had an exceptional quarter now that it operates under long-term PPAs. Plant EBITDA more than tripled year-on-year to 368 crores in quarter 2 FY27 and grew over 60% year-on-year in H1. This was driven by significantly better plant performance and by PPA realizations well above the DAM prices at which the plant's power was sold a year ago. On renewables, all-India generation grew about 11% year-on-year for wind and about 39% for solar in Q2, driven largely by capacity additions with all-India PLFs of 37% for wind and 18% for solar. Our wind and solar portfolio operates operated at PLFs of 46% and 19% respectively. And generation was up 25% for wind and 36% for solar, supported by a year-on-year capacity increase of 1.5 GW. Now turning to our financials, many of which you will already be familiar with from the pre-call materials, backed by robust capacity addition and healthy plant performance, revenue for the quarter was 6,658 crore, which is up 24% year-on-year, and EBITDA was 3,907 crores, up 23% year-on-year. With year-on-year capacity addition of 1.9 GW and new assets being capitalized, depreciation rose 17% to 943 crores, and finance cost rose 14% to 1,615 crores in line with the pace of capacity we are adding. Further, I am sure many of you have questioned about the potential increase in the interest rate due to the recent actions by RBI and the inflationary expectations.
Sharad Mahendra (JSW Energy Ltd): and what they could mean for our bottom line. Our debt book is well insulated. Close to a quarter of our term debt is at fixed rates, which is around 88% only, and nearly 90% of the floating portion is linked to lender's internal benchmark like MCLR rather than repo or other marketing instruments like treasury bills, etc. Historically, we have seen that MCLR tend to lag and not increase in the same quantum as that of repo. We also actively and progressively keep pursuing refinancing as our projects reach commissioning and build operating track records. With that lever of refinancing still available and lag in MCLR reset, we do not see any immediate rise in our debt cost and maybe only a modest impact in the medium term if the interest rate hikes continue. Additionally, as you can see in our presentation, our debt cost has come down significantly by about 51 basis point to 8.28% from about 8.79% a year back. Profit after tax was 1141 crores, up 38% year-on-year and PAT attributable to shareholders was 1000 50 1056 crores, up 50% year-on-year. Excluding debt tied to capital work in progress, our net debt to TTM EBITDA stands at about 4.9 494% times down from about 5.2 times in FY26. We hold cash and cash equivalents of about 15,700 crores and our cash return on net worth adjusted for our JSW Steel shareholding stands at about 15%. Now, let me return to where I started. The economy is growing strongly and power demand is going growing even faster. Energy security is now national policy and the market is rewarding firm reliable power. On this front, JSW Energy is well positioned on each of these fronts. We have a portfolio diversified across modes such as thermal, hydro, wind, and solar, backed by an increasingly integrated supply chain. We have a clear record of delivery with 1.4 GW commissioned this year and full visibility of the next 1.6 GW in balance part of this current fiscal financial year. Our locked-in pipeline underwrites the next phase of growth and a healthy balance sheet gives us the headroom to found it fund it. Overall, we entered the second half of the year with confidence and momentum. Thanks, friend. Now, as we approach Diwali, I would also like to extend warm wishes to all of you and your families for a joyous festival and a prosperous year ahead. Thank you, and we look forward to your questions now. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar (ICICI Securities): Yeah. Good evening, sir. And congratulations on a very, very good set of results. My first question is on the on the JSW Mahanadi PPA. If I see your slides, I think you are talking about the PPA which is exploring. My question is, are you looking at the utility utility kind of PPA? My question I'm asking this question because most of this discom PPAs are coming with the condition that you have to set up the capacity within the state. And we haven't heard anything from Chhattisgarh floating those kinds of PPAs. Yeah.
Sharad Mahendra (JSW Energy Ltd): Yes, Mohit. Thank you. See, I think when you're talking about Mahanadi, you are talking about the PPAs for the upcoming capacities is what we believe.
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