Adani Energy Solutions Limited — Q4 FY26 earnings call

Call held 24 Apr 2026

Management summary

Adani Energy Solutions reported a strong Q4 and FY26, marked by significant capex deployment of nearly INR 15,000 crores and exceeding smart meter installation targets with 83 lakh meters. The company commissioned the Mumbai HVDC project, boosting its regulatory asset base, and improved its credit rating despite high capital expenditure. While free cash flow was negative due to investments, management expressed confidence in maintaining leverage ratios and capitalizing on a robust project pipeline across transmission, distribution, and smart metering.

Highlights

  • FY26 Capex reached nearly INR 15,000 crores, demonstrating strong execution capability.

  • Smart meter installations for FY26 reached 83 lakh meters, exceeding the target of 70 lakh meters.

  • Credit rating improved to AAA+ or AAA, leading to reduced interest costs despite scaling up capex.

  • Mumbai HVDC project commissioned, contributing to a regulatory asset base (RAB) of over INR 10,500 crores.

  • Transmission market share improved to almost 29% of projects that went into bidding, with a robust pipeline of INR 150,000 crores identified.

Concerns

  • Free cash flow was negative INR 7,500 crores for FY26 due to significant capital expenditure.

  • HVDC Pole 2 for Mumbai is still under evaluation at MERC and STU levels, with no firm timeline for commissioning.

  • ROW challenges persist for some transmission projects, though management states these are being systematically addressed.

Key financials

2 periods

Headline

  • Consolidated Operating Profit
    ₹8,726 Cr

FY26

  • Capex
    ₹14,431 Cr
  • Capitalization
    ₹15,300 Cr
  • Free Cash Flow
    ₹-7,500 Cr

What they filed

Q1 FY27: revenue up 42.4%, net profit up 129.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue6,184 5,830 6,375 6,819 6,596 +7%6,730 +15%7,443 +17%9,711 +42%
EBITDA1,715 1,661 2,040 1,811 1,955 +14%1,995 +20%2,145 +5%3,008 +66%
Net profit773 625 714 539 557 −28%574 −8%723 +1%1,237 +129%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Smart Metering
    ₹593 Cr Operating EBITDA (FY26)₹214 Cr Operating EBITDA (Q4 FY26)
  • FY26 Capitalization - Transmission
    ₹10,260 Cr Capitalization
  • FY26 Capitalization - Distribution
    ₹1,511 Cr Capitalization
  • FY26 Capitalization - Smart Metering
    ₹3,556 Cr Capitalization

Order book

high confidence

Total value

2,46,00,000 meters

as of 2026-03-31 quantified

Composition

  • Smart Meters (product) 2,46,00,000 meters 100%

Pipeline

other

Transmission projects identified for bidding

The company has a robust order book for smart meters and a significant pipeline of transmission projects identified for bidding, with a substantial portion expected to be finalized in the next 12 months.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹21,000 Cr 70% debt, 30% equity funded through internal accruals
    • Transmission capex for FY27 ₹15,500 Cr
    • Distribution capex for FY27 ₹2,350 Cr
    • Smart metering capex for FY27 ₹3,900 Cr
    So we will have about INR22,000 crores of capex next year, of which transmission would be about 15,500, distribution about 2,350, smart metering about 3,900 and so these are the numbers. So we'll be around 21,000 -- between 21,000 to 22,000. ... most of our assets, we generally finance it in the ratio of 70:30. So only the equity portion is funded through the internal accruals.
  • Debt 4.5× EBITDA
    • Refinance Refinanced $500 million bond from Apollo, a U.S. insurance investor. $500 Mn
    No, we'll continue to maintain that leverage in the ratio of around 4.5x to 4.7x.

Guidance & targets

Capex

  • FY27 Capex Capex · FY27 · High confidence INR 21,000-22,000 crores
    So we will have about INR22,000 crores of capex next year, of which transmission would be about 15,500, distribution about 2,350, smart metering about 3,900 and so these are the numbers. So we'll be around 21,000 -- between 21,000 to 22,000.

    — Kandarp Patel

  • FY28 Capex Capex · FY28 · Medium confidence INR 22,000-25,000 crores
    No, no, it is possible, but that number will be a little approximate, but it will be around 23,000. So of that the transmission would be about 20,000. Distribution, again, will be about 2,000 and smart metering, given the order book, we are not assuming the additional one. But given the order book, it will be 1,500 and whatever the additional order that will come will get added. So somewhere between 22,000 to 25,000.

    — Kandarp Patel

  • Total Locked-in Capex Capex · Ongoing · High confidence INR 77,000 crores
    And second thing is also certain that we have locked in capex of INR77,000 crores.

    — Kandarp Patel

Capitalization

  • FY27 Capitalization Capitalization · FY27 · High confidence INR 21,000-22,000 crores
    And the capitalization number in FY27 would be about 21,000, 22,000.

    — Kandarp Patel

  • FY28 Capitalization Capitalization · FY28 · High confidence INR 13,000 crores
    In FY28, it could be about 13,000.

    — Kandarp Patel

Smart Metering

  • Smart Meter Installation Smart Metering · FY27 · High confidence Minimum 1 crore meters
    Manish, so next year probably we'll be doing about minimum about 1 crores meters.

    — Kandarp Patel

Market Share

  • Transmission Market Share Market Share · Ongoing · High confidence 25-30%
    So Manish, currently, we are about -- in fact, we were about 20 percentage, 25 percentage. We have improved this year to close to 30 percentage. So we will continue to maintain that market share between 25 percentage to 30 percentage.

    — Kandarp Patel

Debt

  • Net Debt to EBITDA Debt · Ongoing · High confidence 4.5x to 4.7x
    No, we'll continue to maintain that leverage in the ratio of around 4.5x to 4.7x.

    — Kunjal Mehta

Opportunity

  • Intrastate Transmission Opportunity Opportunity · Annually · Medium confidence INR 30,000-40,000 crores annually
    So intrastate would be around INR30,000 crores to INR40,000 crores collective all state together annually.

    — Kandarp Patel

EBITDA

  • FY27 EBITDA EBITDA · FY27 · Medium confidence Around INR 11,500 crores
    So next year, given the capitalization plan, we expect that number could be around INR11,500 crores.

    — Kunjal Mehta

  • Transmission EBITDA Growth EBITDA · Within 3-4 years · High confidence 3x current levels
    Once all these, all the existing transmission project gets completed in the next 36 to 40 months the transmission EBITDA will be 3x from existing transmission EBITDA.

    — Kunjal Mehta

Revenue

  • Mumbai HVDC Full Year Tariff Revenue · FY27 · High confidence INR 1,300 crores
    So currently, the number is INR1,300-odd crores which is the full year tariff from the Mumbai HVDC project, which we will start accruing from next full next financial.

    — Kunjal Mehta

What to watch in Q1 FY27

FY27 Capex Deployment

Next quarter (Q1 FY27) and subsequent quarters
Current INR 14,431 crores in FY26
Target INR 21,000-22,000 crores

Why it matters

Verifies the company's ability to execute its ambitious capital expenditure plans across transmission, distribution, and smart metering.

So we will have about INR22,000 crores of capex next year, of which transmission would be about 15,500, distribution about 2,350, smart metering about 3,900 and so these are the numbers. So we'll be around 21,000 -- between 21,000 to 22,000.

Risks & concerns

  • Negative Free Cash Flow due to High Capex

    medium

    FY26 free cash flow was negative INR 7,500 crores due to INR 14,431 crores capex, but management explained it as part of the project finance model (70:30 debt:equity) with internal accruals covering equity.

    Analyst acknowledged

  • Uncertainty on HVDC Pole 2 Commissioning

    medium

    HVDC Pole 2 for Mumbai is still under evaluation at MERC and STU levels, with no firm commitment on commissioning timeline, despite the need for additional transmission capacity.

    Analyst acknowledged

  • Right-of-Way (ROW) Challenges for Transmission Projects

    medium

    Challenges related to land ownership and public resistance for ROW persist, though management states that structured processes, government policies, and police support are helping to resolve issues.

    Management acknowledged

  • Geopolitical Situation Impact

    low

    Challenging geopolitical situation, but the company has been able to leverage its financial and operational strength to manage it, as demonstrated by successful refinancing.

    Management acknowledged

Q&A highlights

7 direct
Capex and Capitalization Outlook for FY27 & FY28 Direct
So we will have about INR22,000 crores of capex next year, of which transmission would be about 15,500, distribution about 2,350, smart metering about 3,900 and so these are the numbers. So we'll be around 21,000 -- between 21,000 to 22,000. ... the capitalization number in FY27 would be about 21,000, 22,000. In FY28, it could be about 13,000.

Provides clear forward-looking capital expenditure and capitalization plans crucial for growth projections.

Asked by Mohit Kumar

Balance Sheet Leverage and Free Cash Flow Direct
So that's from an operating cash flow. So you would understand is that most of our assets, we generally finance it in the ratio of 70:30. So only the equity portion is funded through the internal accruals. So balance is tied up through the debts. From that position, we are fully comfortable to meet all our existing capex requirements...

Addresses concerns about negative free cash flow due to high capex and reiterates comfort with the debt financing model and leverage targets.

Asked by Manish Ostwal

CWIP Breakdown and Capitalization Logic Direct
So between the SCA assets and the normal conventional assets, so if you look at the financials, the current CWIP is around INR2,053 crores, which is for the non-SCA assets and for the currently, we are currently having SCA assets of about I'll just give you the number. ... So SCA assets is currently around INR6,200 crores and the CWIP is around INR2,500 crores.

Clarifies the accounting treatment and breakdown of assets under construction, especially for smart metering (SCA assets) and conventional CWIP.

Asked by Dhruv Muchhal

HVDC vs. Batteries Debate and Intrastate Transmission Shift Direct
No, obviously, that debate is going on at a policy level as to how much of transmission capacity that country should add because it also has a cost implication, especially for renewable project. So the debate is that should we push as a sector the installation of more co-located BESS so that transmission costs could be optimized. ... But we expect to see a lot more activity from a state side because all those transmission corridors, which are created or which are being created for taking renewable energy to load center.

Highlights a key policy debate impacting future transmission infrastructure and signals a shift towards more intrastate projects for renewable energy evacuation.

Asked by Dhruv Muchhal

Smart Metering Installation Targets and Future Tenders Direct
Manish, so next year probably we'll be doing about minimum about 1 crores meters. Having done 83 lakh meters in the current year, we are confident that we'll be able to install another 1 crores meter in the current financial year. As far as next opportunity is concerned, you must have seen when we started that concessions were about 2.3 crores, but now we have reached to 2.46 crores.

Provides specific installation targets for the next fiscal year and details the current order book and future tender opportunities in smart metering.

Asked by Manish Somaiya

Mumbai HVDC Revenue Booking and HVDC Pole 2 Status Partial
So currently, the number is INR1,300-odd crores which is the full year tariff from the Mumbai HVDC project, which we will start accruing from next full next financial. ... So as far as HVDC Pole 2 is concerned, the evaluation at MERC and STU level is going on. We feel that Mumbai will require -- certainly require additional transmission capacity. But we can't commit currently, because that's still under the evolution at MERC and STU level.

Clarifies revenue recognition for the commissioned HVDC project and indicates ongoing regulatory uncertainty regarding the second HVDC pole.

Asked by Mohit Kumar

Progress on New HVDC Projects (Fatehpur-Bhadla, Khavda-Olpad) and ROW Challenges Direct
So as far as Fatehpur-Bhadla HVDC is concerned, the construction has already begun, both at a substation and a line level. And we haven't faced any significant ROW challenge as far as that project is concerned. As far as Khavda-Olpad is concerned, we have finalized all the contracts, but the construction has yet not started, it will start.

Provides an update on the execution status of key upcoming HVDC projects and addresses potential Right-of-Way (ROW) hurdles.

Asked by Mohit Kumar

Borrowing Level and Net Leverage Target Direct
Sir, I don't have an absolute number about 4 years borrowing level, but we have been always giving a guidance that our net leverage would be in the range of 4.5x to 4.7x. So we will continue to maintain that and that financial discipline, we will continue to maintain to ensure that we always get the highest ratings overall.

Reaffirms the company's commitment to maintaining its target net leverage ratio despite significant capex, crucial for credit ratings and financial stability.

Asked by Bharat Shah

2 min read 6 chapters

Detailed narrative

Q4 & FY26 Performance Highlights and Strategic Shifts

Adani Energy Solutions concluded FY26 with significant operational and financial milestones, including a consolidated operating profit of INR 8,726 crores. The company achieved a record 83 lakh smart meter installations, surpassing its 70 lakh target for the year. Total capex for FY26 reached approximately INR 15,000 crores, with a notable shift towards higher capital deployment. Despite this aggressive capex, the company improved its credit rating to AAA+ or AAA, leading to reduced interest costs.

Ambitious Capex and Capitalization Plans for FY27-FY28

The company has outlined substantial capex plans, targeting INR 21,000-22,000 crores for FY27, including INR 15,500 crores for transmission, INR 2,350 crores for distribution, and INR 3,900 crores for smart metering. For FY28, capex is projected to be INR 22,000-25,000 crores. Capitalization for FY26 stood at INR 15,300 crores, with FY27 projected at INR 21,000-22,000 crores, indicating strong asset base growth and a total locked-in capex of INR 77,000 crores.

Smart Metering Business Expansion and Future Opportunities

The smart metering segment demonstrated robust growth, installing 83 lakh meters in FY26 and targeting a minimum of 1 crore meters in FY27. The existing order book for smart meters stands at 2.46 crore meters. Management views smart metering as a perpetual business beyond current contractual periods, with significant future bidding opportunities in states like Tamil Nadu, Karnataka, Telangana, Andhra Pradesh, Gujarat, and MP.

Transmission Business Growth and Project Pipeline

Adani Energy Solutions has significantly increased its transmission market share to almost 29% of projects that went into bidding. The company has identified a pipeline of INR 150,000 crores in projects for bidding, with INR 80,000 crores to INR 1 lakh crores expected to be finalized within the next 12 months. The Mumbai HVDC project was fully commissioned in FY26, expected to generate INR 1,300 crores in full-year tariff from FY27, contributing to a 3x growth in transmission EBITDA within 3-4 years.

Focus on C&I Segment and Operational Excellence

The C&I segment is emerging as a major growth driver, with 5,000 megawatts of renewable capacity contracted and 1,400 megawatts already serving third-party consumers. The company maintains high operational efficiency with 99.7% O&M availability and has reduced distribution losses to 4.2%. Management emphasized that efficiency gains in distribution are transferred to investors for incremental returns while maintaining stable tariffs for customers.

Financial Discipline and Leverage Management

Despite a negative free cash flow of INR 7,500 crores in FY26 due to high capex, management expressed confidence in its project finance model, where 70% of assets are debt-financed and equity is covered by internal accruals. The company aims to maintain its net debt to EBITDA ratio in the range of 4.5x to 4.7x, ensuring financial discipline and high credit ratings. The refinancing of a $500 million bond from Apollo underscores its ability to leverage financial strength even in challenging geopolitical situations.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Power earnings calls