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.