Detailed Narrative
Q3 FY26 Financial Performance and Operational Impacts
Sarda Energy & Minerals reported consolidated revenue of INR1,360 crores for Q3 FY26, reflecting the impact of planned plant shutdowns and weaker price realizations. Despite these headwinds, EBITDA increased to INR395 crores, up 7.33% year-on-year from INR368 crores in Q3 FY25, primarily driven by the energy segment. Consolidated PAT for the quarter stood at INR190 crores. For the nine-month period ending December 2025, the company delivered a robust operating performance with PAT increasing by 59% to INR954 crores.
Energy Segment Growth and New PPAs
The company's integrated Energy plus Minerals platform demonstrated steady execution. Hydropower generation for the nine-month period increased by 28% year-on-year to 621 million units, supported by favorable monsoon conditions and the commissioning of the 24.9 megawatt Rehar Hydro Power Project. A 40-year Power Purchase Agreement (PPA) has been signed for the Rehar project with Chhattisgarh State Power Distribution Company Limited at a tariff of INR7.42 per unit, ensuring long-term revenue visibility. Additionally, the company secured 200 MW of medium-term and 100 MW of long-term power offtake for its IPP, providing cash flow stability.
Mining and Raw Material Capacity Expansion
Development of the Sahapur West high-grade coal mine is progressing on schedule, with commissioning targeted before the end of the next financial year (FY27). Approval to enhance the capacity of the Gare Palma IV/7 Coal Mine from 1.68 million tons to 1.8 million tons is in its final stage and expected shortly, with enhanced output anticipated within the current financial year. Approval processes for other coal mines (Gare Palma IV/5, Bartunga, and Sinduri) are also ongoing. The company noted that fresh environmental clearances for the 3 million tonne coal mine expansion would take a minimum of two years.
Strategic Projects and Capital Allocation
The commissioning of a 50 megawatt captive solar power project is expected in the first quarter of the next financial year (Q1 FY27). Work on the 30 megawatt TG set replacement is progressing, with commissioning anticipated by mid-FY27. The company is also pursuing approvals for the expansion of its existing 600 megawatt IPP thermal power project. Capital expenditure for FY26 is projected to be between INR550-600 crores, with over INR400 crores already spent in the first nine months, and similar expenditure planned for organic opportunities in FY27.
Balance Sheet Strength and Debt Reduction
The company maintains a strong balance sheet with negligible net gearing and net debt to EBITDA well below 1x. Consolidated net debt as of December 31, 2025, was significantly reduced to below INR500 crores from approximately INR1,500 crores as of March 31, 2025. This substantial debt reduction reflects the company's disciplined financial management and robust liquidity position, with the company remaining cash positive on a standalone level.
Industry Outlook and Market Dynamics
The broader industry environment shows positive trends, with India's crude steel production growing over 10% in calendar year 2025, supported by infrastructure spending and manufacturing activity. Steel prices, which had touched multi-year lows, recovered sharply by 10-15% towards the end of December. Power demand remained largely flat year-on-year, with IEX average prices moderating to INR3.33 per unit. Ferroalloys exports increased by 43% year-on-year in Q3 FY26 to 33,272 metric tons.