Torrent Power Ltd (TORNTPOWER) Q1 FY27 Earnings Call: Guides 1.2 GW RE Commissioning, Distribution Profit Surges 71% YoY

Torrent Power Ltd held its Q1 FY27 earnings call on August 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

PBT Declines as Thermal Contribution Drops; Distribution Offsets

• Adjusted PBT of Rs.925 crores in Q1 FY 2026-2027, down Rs.119 crores YoY from an adjusted base of Rs.1,044 crores (Q1 FY26 reported Rs.985 crores included a Rs.59 crores non-recurring MTM loss).
• Tax rate rose to 28% (vs. 25% in Q1 FY26) due to expiry of Section 80-IA tax holidays for certain units, pressuring net profitability.
• Thermal generation contribution declined Rs.123 crores YoY (adjusted basis), driven by lower merchant sales & LNG trading gains (–Rs.87 crores) and higher O&M expenses (Rs.51 crores) from gas plant flexibility upgrades, partly offset by a Rs.15 crores contribution from the newly acquired Naba Power plant (consolidated for 5 days).
• Distribution & transmission segment profit surged 71% YoY, aided by regulatory orders approving Rs.41 crores in carrying costs, operational improvement of Rs.19 crores (higher ROE/ROCE, 4% volume growth in franchise distribution), and Rs.11 crores incremental profit from a new transmission project.
• Other factors lowered profitability by Rs.90 crores, mainly from higher finance cost (capitalisation-related) and increased depreciation, largely in the renewables segment.

4.6 GW RE Pipeline Under Implementation; Thermal and Hydro Projects Advancing

• Total installed capacity reached 6.6 GW as of 30 June 2026, comprising gas 2.7 GW, coal 1.8 GW, and renewables 2.1 GW; 70 MW of renewable capacity was commissioned in Q1 FY27.
• 4.6 GW of renewable energy projects under implementation — management guided for ~1.2 GW commissioning in FY27, 1.4–1.6 GW in FY28, and the balance in FY29.
• Naba Power acquisition closed 25 June 2026, contributing ~Rs.15 crores profit in 5 days; management guided steady-state EBITDA of ~Rs.1,000 crores per annum for the asset.
• Anukool thermal project (1.6 GW) — PPA signed, LOA issued, environment clearance received; management expects commissioning in 3–4 years; cumulative CAPEX incurred of Rs.450 crores.
• Pump storage hydro project (3 GW, Maharashtra) — agreement with MSEDCL signed, LOA issued for civil/mechanical packages; management expects commissioning in 3–4 years; cumulative CAPEX of Rs.1,130 crores.
• Solapur transmission project under implementation; expected commissioning in FY27; cumulative CAPEX of Rs.330 crores.

High Gas Prices Constrain Merchant Operations; Selective Peak Participation

• DGEN plant operated at an LNG price of $20/MMBTU during Q1 FY27, selling power only into the high-demand merchant market for 2–3 hours of peak daily demand; variable cost of ~Rs.13/unit made regular market sales unviable.
• 445 MUs were sold in the merchant market in Q1 FY27, largely through the Hi-Dam market; the EBITDA differential from merchant sales was lower by Rs.87 crores YoY.
• Management expects gas prices to settle at $5–8/MMBtu over the short-to-long-term horizon, bringing LNG merchant plant variable cost to ~Rs.4–4.5/kWh — competitive against battery storage solutions estimated at Rs.5–5.5/kWh.
• No LNG availability issues — only price is the constraint; three cargoes contracted for summer Q1 FY27 were acquired and utilized; the company will rely on spot cargoes opportunistically for the remainder of FY27 (spot prices currently high at ~$20).
• Limited near-term scope for tying up gas-based generation with data centers or C&I customers — management cited inability to hedge gas prices for long-term PPAs and C&I preference for renewables as constraints; no concrete plans as of Q1 FY27.

Ahmedabad Volumes Grow 10%; RE EBITDA Rises but LPS Claim Clouds Comparison

• Ahmedabad circle reported 10% YoY volume growth in Q1 FY27; other circles (Surat, Dahej, DNH) showed muted growth; Dadra & Nagar Haveli was an exceptional case.
• AT&C losses increased in most circles — in Agra, the increase was driven by a higher one-time realization from Agra Nagar Nigam in Q1 FY26 not repeating in Q1 FY27.
• Renewables segment EBITDA rose Rs.66 crores YoY on an absolute, adjusted basis (excluding a favourable Rs.46 crores LPS claim booked in Q1 FY26 that management confirmed was a one-off for the entirety of FY26 and will not recur in FY27).
• 70 MW commissioned in Q1 FY27; management guided for total H1 FY27 commissioning of 400 MW and H2 FY27 commissioning of 800 MW to meet the 1.2 GW full-year target — delays in 1.2 GW RE/FDRE projects attributed to transmission line availability issues (ROW) with the transmission utility (PGCIL).
• Naba Power plant achieved ~85% PLF during the prior quarter; the asset contributed to the Rs.19 crores positive contribution from new renewable capacity and improved PLF in Q1 FY27.

FY27 Capex Program of ~Rs.10,000 Crores Underway; Mid-Teen IRR Threshold Disciplines Bidding

• FY27 CAPEX guided at ~Rs.10,000 crores; Q1 FY27 CAPEX totalled Rs.2,300 crores, split across renewable Rs.1,550 crores, thermal Rs.125 crores, transmission Rs.120 crores, and distribution Rs.500 crores.
• Cumulative CAPEX on RE projects reached Rs.8,800 crores out of a total planned outlay of Rs.29,600 crores, implying a significant ramp in spending over the next 2–3 years.
• Naba Power acquisition gross debt of ~Rs.6,000–6,500 crores, comprising ~Rs.3,000 crores on Naba Power's books and ~Rs.3,800 crores on Torrent Power's books.
• Management caps bidding to achieve a mid-teen IRR threshold across renewable energy tenders, prioritizing returns over capacity acquisition as an ongoing strategy.
• MGEN plant (362 MW) permitted to operate only until 30 December 2026; the Gujarat state government has approved coal allocation for a replacement plant of ~800 MW, but central government approval is pending — management noted the replacement plant's location is undetermined and may not be in Gujarat.

Near-Term Commissioning Trajectory; Regulatory and Gas Price Overhangs

• H1 FY27 commissioning target of 400 MW and H2 target of 800 MW to meet the 1.2 GW full-year RE commissioning goal — transmission infrastructure delays (PGCIL ROW issues) have already pushed some projects (Seki 12 & 16 wind, hybrid) into FY28.
• For Q2 and Q3 FY27, management sees potential for mid-term PLF at the DGEN plant if attractive LNG supply opportunities become available; sustained high gas prices at ~$20/MMBTU remain a constraint for regular market operations.
• New franchise distribution opportunities in Uttar Pradesh expected only after state elections (timing unspecified); some potential in Maharashtra noted but no concrete plans in the pipeline.
• Merchant power opportunities during summer peak periods are expected to persist as peak periods lengthen, though meaningful upside depends on gas price normalization.
• Central government approval for the MGEN replacement plant is a key regulatory overhang — management stated "central government approval is pending" for the coal allocation, which determines whether an ~800 MW unit can be established to replace the expiring 362 MW plant.