IGI Logo

AGEL’s consolidated 2QFY27 EBITDA rose 46% yoy to Rs38.0bn (down 5% qoq; a 5% beat), supported by 24% yoy growth in operational capacity to 20.8GW, better realizations, BESS contribution, and operating efficiencies. Power sales grew 33% yoy, aided by better CUFs, though curtailment weighed on solar CUFs. 1HFY27 EBITDA stood at Rs82.8bn and could have approached Rs90bn without curtailment. However, the impact is expected to ease in 2H as AGEL accelerates BESS deployment as a strategic hedge against evacuation constraints, targeting to surpass 10GWh by FY27-end. Commissioning of the 7GW transmission corridor has been delayed to 4QFY27 from 3QFY27 due to ROW challenges. The management retained its FY27 RE capacity addition guidance of 4.5–5GW, subject to corridor availability. However, AGEL is completing balance-of-system works and infrastructure ahead of transmission readiness, enabling rapid module installation/commissioning once evacuation is assured. Accelerated BESS additions should also support RE deployment amid transmission delays. We retain FY27–29E earnings and roll forward to Sep-27E, raising our TP by 3% to Rs1,700 from Rs1,650; maintain BUY

Result highlights

AGEL reported 2QFY27 consolidated revenue of Rs42.6bn, up 42% yoy and at a 5% beat, albeit down 4% qoq. Core power supply revenue grew 45% yoy to Rs40.2bn (a 3% beat; down 6% qoq), driven by 24% yoy growth in operational capacity, better realizations, and marginally higher CUFs. Sequentially, however, CUFs moderated due to seasonality. Book realization rose 9%/6% yoy/qoq to Rs3.3/kWh, backed by sequential improvement in merchant tariffs. Power supply EBITDA rose 51% yoy to Rs38.4bn (down 7% qoq), with EBITDAM improving to 95%. Finance cost was up 30%/6% yoy/qoq to Rs21.2bn, while net debt rose 37% yoy to Rs1.1trn (up 14% HoH). D/A was up 6% qoq to Rs10.8bn; other income of Rs2.6bn was up 9%/13% yoy/qoq, though at a 13% miss. Share of profit from associates/JVs fell 29% yoy to Rs820mn (up 41% qoq). AGEL’s APAT (after MI) beat our estimate by 28% (at Rs6.7bn; down 8%/21% yoy/qoq). Share of merchant and infirm power fell to 43% from 44% yoy and qoq each. AGEL added 3,081MWh of BESS capacity in 2QFY27, partly mitigating curtailment amid a sharp decline in grid availability.

Management KTAs

AGEL targets 13-14% ROA. AESL contracted solar tariffs are better (at Rs2.7/kWh) than current merchant rates (Rs2.3-2.4/kWh), while wind at Rs3.93/kWh compares with ~Rs4/kWh, supporting targeted returns. Scheduled power is compensated for procurer rejection or grid curtailment. 72–73% of project loans carry fixed rates for 3–5 years; ~70% of debt is rupee-denominated. Rating/borrowing cost to improve on rising operational share; leverage to also improve. Of the 6.6GWh BESS, 3.5GWh is contracted.

Valuation

We value AGEL at 12.5x FY31E EV/EBITDA, discounted at 15% (CoE) to Sep-27E. Key risks: project execution, policy, equipment inflation, technology, resource-yield related.

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354