Torrent Power Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Torrent Power reported a strong Q3 FY26 with reported PBT up 28% and adjusted PBT up 46% YoY, reaching INR805 crores. Growth was broad-based across thermal generation, distribution, and renewables, driven by regulatory benefits, asset capitalization, and new capacity. The company continues to expand its renewable pipeline and targets 1.2-1.5 GW commissioning next year, while maintaining a comfortable debt profile.

Highlights

  • Reported PBT for Q3 FY26 increased by 28% YoY to INR805 crores, up from INR630 crores in Q3 FY25.

  • Adjusted PBT (excluding one-off income in prior year) grew 46% YoY to INR805 crores from INR553 crores.

  • Thermal generation business saw a significant increase of INR163 crores, driven by favorable regulatory orders and INR75 crores from merchant power and LNG sales.

  • Distribution business improved by INR106 crores, benefiting from better T&D losses in franchise units, higher ROE/ROCE from asset capitalization, and INR41 crores from favorable regulatory orders.

  • Renewable generation contributed an additional INR24 crores, supported by higher PLF from existing wind projects and the commissioning of 285 megawatts of new solar capacity.

Concerns

  • Power demand growth has been flattish in the last 15 days of the quarter, attributed to a strong base last year and extended monsoon.

  • Specific distribution areas like Ahmedabad and Surat experienced Y-o-Y decline in demand due to factors like good winter and industrial slowdowns (diamond, textiles).

  • Management noted that the INR270 crores favorable regulatory order for UNOSUGEN is a one-time gain and could not be explained in detail during the call.

Key financials

  1. Reported PBT ₹805 Cr +27.8%YoY
  2. Adjusted PBT ₹805 Cr +45.6%YoY

What they filed

Q1 FY27: revenue up 2.8%, net profit down 10.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue7,176 6,499 6,456 7,906 7,876 +10%6,778 +4%6,406 −1%8,124 +3%
EBITDA1,207 1,112 1,130 1,483 1,506 +25%1,403 +26%1,149 +2%1,538 +4%
Net profit496 489 1,077 742 742 +50%655 +34%331 −69%662 −11%
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

Share of Contribution Increase
₹293 Cr Total
  • Thermal Generation Business ₹163 Cr 55.6%
  • Distribution Business ₹106 Cr 36.2%
  • Renewable Generation Business ₹24 Cr 8.2%

Order book

high confidence

Total value

5 gigawatt

as of 2025-12-31 quantified

Inflow this quarter

500 megawatt

Composition

Mix 3 products
  • Gas-based 54%
  • Renewable 40%
  • Coal-based 7.2%

Share of order book by product

Pipeline

other

Pipeline projects include 4 gigawatt renewable capacity, 3 gigawatt of pump storage capacity, 1.6 coal-based capacity and 2 transmission projects at Khavda and Solapur.

The company has a robust pipeline of projects across generation and transmission, with an aspiration to reach 10 gigawatts of renewable capacity.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Renewable projects (Q3 FY26) ₹1,750 Cr
    • Renewable projects (YTD 9 months) ₹3,100 Cr
    • License and franchise (YTD 9 months) ₹1,100 Cr
    • Transmission (YTD 9 months) ₹240 Cr
    • Coal project (YTD 9 months) ₹400 Cr
    • PSP (YTD 9 months) ₹300 Cr
    Q3 renewable projects, we had incurred capex of INR1,750 crores. If I look at the YTD number, it was around INR3,100 crores... Cumulative 9 months about INR1,100 crores for license and franchise basically, both put together. And transmission about INR240 crores. Coal project is about INR400crores. PSP, we incurred about INR300 crores. Renewable, as we explained about INR3,100 crores, that is what we've incurred basically capex in 9 months.
  • Debt 1.4× EBITDA
    • Repayment Reduction in finance costs on the back of pre-repayment made in Q4 of FY '25.
    For example, our net debt-to-equity ratio is 0.40 as on March '25 and net debt to EBITDA is 1.41.

Guidance & targets

Capacity

  • Renewable Capacity Commissioning Capacity · next year (FY27) · High confidence 1.2 to 1.5 gigawatt
    So we can give a sense of about -- for the next year, we expect to commission about 1.2 to 1.5 gigawatt next year. I think in a similar pace, we can expect in next year also the year thereafter also.

    — Saurabh Mashruwala

  • Renewable Capacity Aspiration Capacity · Low confidence 10 gigawatts
    I think our aspiration is to reach a 10 gigawatts of renewable capacities, which we look at it.

    — Management

Profitability

  • SMK Breakeven Profitability · FY27 · Medium confidence Breakeven
    So by next year, we can expect breakeven happening, sir? FY '27? Yes. Yes.

    — Saurabh Mashruwala

Other

  • Bhiwandi Franchise Agreement Extension Other · Medium confidence 5 years
    So if you look at our investor PPT, we have already said that can be extended 5 years upon mutual agreement.

    — Rishi Shah

What to watch in Q4 FY26

Power Demand Growth Recovery

next quarter
Current Flattish in last 15 days of Q3 FY26
Target Growth in line with GDP (6.5-7%)

Why it matters

Sustained power demand growth is crucial for the company's distribution and generation volumes and overall profitability.

So one can say that it's an exception kind of a thing, aberration kind of thing, I would say, because if GDP has to grow at 6.5% to 7%, power demand has to grow in a similar line.

Risks & concerns

  • Power demand growth slowdown

    medium

    Recent flattish power demand growth attributed to strong base effect and extended monsoon, expected to normalize with GDP growth.

    Analyst downplayed

  • Transmission constraints for renewable projects

    medium

    ROW issues and transmission not being ready are challenges for some projects, but management is confident in handling them for next year's commissioning targets.

    Analyst acknowledged

  • Delay in PSP project execution

    medium

    While key contracts are awarded, management indicated that delays may happen for the PSP project beyond the October '28 SCOD.

    Analyst acknowledged

  • Uncertainty regarding Bhiwandi franchise agreement extension

    medium

    The agreement, expiring Jan '27, requires mutual discussion with MSEDCL for a 5-year extension, with no automatic renewal clause.

    Analyst acknowledged

Q&A highlights

4 direct, 1 evasive
Explanation of INR270 crores regulatory benefit for UNOSUGEN Evasive
We'll explain -- we will not able to explain at this moment right now.

Management declined to provide details on a significant one-time regulatory gain, raising questions about its nature and future recurrence.

Asked by Bharani V.

Impact of power demand growth slowdown on Torrent Power Partial
So one can say that it's an exception kind of a thing, aberration kind of thing, I would say, because if GDP has to grow at 6.5% to 7%, power demand has to grow in a similar line.

Analysts raised concerns about recent power demand slowdown, which management attributed to temporary aberrations rather than structural issues, but acknowledged the impact.

Asked by Sumit Kishore

Comfort on commissioning 1.2-1.5 GW of renewable projects given transmission constraints Direct
In terms of land, we are reasonably okay. Land is not the issue. Only thing -- maybe the ROW issue everybody is facing, we may face, but we have to handle those issues, and we have to implement our execution plan.

Management expressed confidence in meeting commissioning targets despite sector-wide transmission challenges, citing land availability and plans to address ROW issues.

Asked by Dhruv Muchhal

Applicability of new ROCE methodology for older assets and incremental assets Direct
So it's basically a prospective change. For the older assets, you continue to earn the ROE as you were earning earlier. Of course, the rate has changed. But for the incremental assets capitalized, it moves to the ROCE model.

Clarified that the shift to ROCE is prospective, impacting only new capitalizations post-April '25, while older assets retain their previous ROE mechanism.

Asked by Dhruv Muchhal

Nature of milestones for achieving 150 basis points incremental ROE Direct
Arul, these are all milestones are linked to operational efficiencies like your AT&C loss, your SAIDI, your SAIFI, your other parameters linked to your operational parameters.

Management detailed that higher ROE is tied to achieving operational efficiency targets, providing insight into performance drivers beyond just tariff rates.

Asked by Arul Selvan

Status and renewal prospects of the Bhiwandi distribution franchise agreement Partial
So if you look at our investor PPT, we have already said that can be extended 5 years upon mutual agreement... No automatic extension clause, but we need to discuss with MSEDCL.

The agreement's renewal is critical for the distribution segment, and while extension is possible by mutual agreement, it's not automatic and requires ongoing discussions.

Asked by Arul Selvan

Profitability and breakeven timeline for the SMK circle Direct
So in terms of AT&C losses, if you look at, we have reached about 20% level. So we are near to the breakeven, I would say. So by next year, we can expect breakeven happening, sir? FY '27? Yes. Yes.

Management provided a clear timeline for breakeven in the SMK circle, indicating progress in reducing AT&C losses and improving operational efficiency.

Asked by Anuj Upadhyay

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Torrent Power reported a strong Q3 FY26 with PBT increasing by INR175 crores (28%) YoY to INR805 crores. After adjusting for a non-recurring income of INR77 crores in Q3 FY25 from cable business sale, the adjusted PBT for Q3 FY26 stood at INR805 crores compared to INR553 crores in Q3 FY25, marking a 46% increase. Tax expenses were lower due to favorable regulatory orders eligible for tax exemption received during the quarter.

Generation Business Performance

The thermal generation business saw its contribution increase by INR163 crores in Q3 FY26. This was primarily driven by favorable orders from regulators and a contribution of INR75 crores from the sale of Merchant Power and LNG. However, foreign currency fluctuation led to higher expenses of INR35 crores, partially offsetting these gains. The INR270 crores favorable regulatory order mentioned was related to the UNOSUGEN project and was clarified as a one-time gain from the past year.

Distribution Business Performance

The distribution business contributed an additional INR106 crores to the company's performance. This improvement was attributed to three factors: better T&D losses in distribution franchise units (partially offset by higher T&D losses in licensed distribution), an increase in ROE and ROCE due to asset capitalization and new tariff regulations, and INR41 crores from favorable regulatory orders. The ROE for Gujarat circles has increased from 14% to 15.5% (ROCE), with the new methodology applying prospectively to assets capitalized post-April '25.

Renewable Energy Expansion & Pipeline

The renewable generation business saw its contribution increase by INR24 crores, benefiting from higher PLF in existing wind projects and the commissioning of 285 megawatts of new solar capacity. The company's aggregate installed generation capacity reached 5 gigawatts as of December 31, 2025, including 2 GW of renewable capacity. The pipeline includes 4 GW renewable, 3 GW pump storage, and 1.6 GW coal-based projects, with a target to commission 1.2 to 1.5 gigawatts (DC level) in FY27. The company also holds an aspiration to reach 10 gigawatts of renewable capacity.

Capital Expenditure & Debt Profile

Torrent Power incurred INR1,750 crores in capex for renewable projects during Q3 FY26, bringing the YTD (9 months) renewable capex to INR3,100 crores. Total cumulative capex for the 9-month period across all segments was INR5,140 crores, including INR1,100 crores for license and franchise, INR240 crores for transmission, INR400 crores for coal projects, and INR300 crores for PSP. The company maintains a comfortable financial position with a net debt-to-equity ratio of 0.40 as of March '25 and a net debt to EBITDA ratio of 1.41, financing new projects with a 70-30 or 75-25 debt-equity mix.

Power Demand Trends

Management noted a recent slowdown in power demand growth, particularly in the last 15 days of the quarter, which was attributed to a strong base effect from the previous year and an extended monsoon. Specific regions like Ahmedabad and Surat experienced Y-o-Y declines due to factors such as good winter conditions and industrial slowdowns in sectors like diamond and textiles. However, management views this as an aberration, expecting demand to grow in line with GDP at 6.5-7%.

LNG Procurement Strategy

Torrent Power has executed a 10-year LNG sale agreement with JERA for 0.27 MMTPA, covering approximately 25% of its total LNG requirement. This agreement involves four cargoes annually from 2027 to 2037, with pricing linked to Brent crude. This strategic procurement aims to secure long-term fuel supply for its gas-based power plants.

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