Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adani Energy Solutions Ltd (BOM:539254, Financial) reported a strong performance in Q2 FY 2025, with significant growth across its transmission, distribution, and smart meter businesses.
- The company raised equity of 8,302 crore, which will fuel capex growth in transmission and smart metering.
- Adani Energy Solutions Ltd (BOM:539254) secured 44 new transmission projects, increasing its projects under construction to 31,700 crore from 17,000 crore.
- The company achieved a 23% increase in revenue, reaching 4,200 crore, and a 31% increase in EBITDA, reaching 1,891 crore.
- The company plans to close the year with a capex of at least 10,000 crore, projecting an EBITDA growth in excess of 15%.
Negative Points
- The rollout of smart meters faced initial constraints due to integration issues and manpower shortages, although these have been addressed.
- There were delays in some projects, such as a transmission project in Mumbai, due to geographical challenges.
- The company faces resistance on the ground from motivated factors, although this is not a major hindrance to operations.
- The effective tax rate is expected to be around 20% for the second half of the year, following a one-time reversal of MAT credit.
- The company is dealing with a show cause notice from SEBI related to shareholder issues, which requires a response and resolution.
Q & A Highlights
Q: Can you provide details on the transmission capex for the next three years and the expected EBITDA from the locked-in portfolio?
A: Kandarp Patel, CEO, explained that the current project under construction is valued at 32,000 crore, with a timeline of 24 months. They expect to add another 15,000 crore, bringing the total to 45,000 crore. This will result in an EBITDA of over 5,000 crore, with 4,200 crore from the current projects and 1,600 to 1,700 crore from new projects.
Q: How do you view the transmission bidding opportunities and pipeline for the next 18 to 24 months?
A: Kandarp Patel stated that there is clarity for the next six months, with 85,000 crore worth of projects identified for bidding. This includes two HVDC projects. Over the next 1 to 1.5 years, an additional 100,000 crore in capex is expected to come up for bidding.
Q: What are the challenges in ramping up smart metering deployment, and what is the expected rollout rate?
A: Kandarp Patel mentioned that initial constraints were due to integration with multiple distribution companies and labor issues. These have been resolved, allowing them to increase deployment from 4,000 to 10,000 meters per day, with plans to reach 16,000 to 20,000 meters per day.
Q: Can you explain the economic model and target customers for the C&I business?
A: Kandarp Patel explained that they target both ISTS and intra-state consumers, leveraging open access regulations. They provide end-to-end power delivery and asset maintenance, creating advantages through demand and supply aggregation. The business model involves securing assets and managing power supply for customers.
Q: What is the outlook for EBITDA growth, and how does it relate to capex?
A: Kandarp Patel indicated that EBITDA growth is expected to exceed 15%, driven by 50,000 crore in capex projects, including smart meters. This growth is anticipated to be over 20% as these projects conclude in the next couple of years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
