Adani Power: Navigating Weather Headwinds with Strategic Expansion in Q2 FY26

Adani Power Limited, a key player in India's energy sector, has reported a resilient performance for the second quarter of the financial year 2025-26. Despite facing unprecedented weather conditions that led to subdued power demand and lower merchant tariffs, the company demonstrated stability in its core earnings. The management highlighted its strategic focus on capacity expansion and securing long-term Power Purchase Agreements (PPAs) to drive future growth and mitigate market volatility.

For Q2 FY26, Adani Power posted a total continuing revenue of 13,639 crore, a marginal increase from 13,465 crore in Q2 FY25. The continuing EBITDA stood at 5,333 crore, closely aligning with the 5,402 crore reported in the prior year's corresponding quarter. Profit After Tax (PAT) for the quarter was 2,906 crore, compared to 3,298 crore in Q2 FY25. This performance reflects the company's ability to maintain operational efficiency and cost control amidst challenging market dynamics.

Operational Resilience and Strategic Growth

Adani Power's operational highlights for Q2 FY26 showcased resilience. The company achieved a power sale volume of 23.7 billion units, a 7% growth over 22 billion units in Q2 FY25. This growth was supported by competitive PPAs, low-cost merchant plants, and increased generation capacity. However, the Plant Load Factor (PLF) for Q2 FY26 was 62.8%, down from 66.9% in Q2 FY25, primarily due to weather-induced demand variability.

The company is aggressively pursuing its capacity expansion goals, aiming to increase its generation capacity from 18 GW to 42 GW by 2032. A significant portion of this expansion, 23.7 GW, is already locked in, with 100% of the critical Boiler, Turbine, and Generator (BTG) sets ordered. These projects are largely brownfield, ensuring land availability and advanced environmental clearances, which de-risks execution.

Key Initiatives and Future Outlook

Adani Power has made notable progress on several strategic initiatives. The company successfully revived the 600 MW Butibori plant of Vidarbha Industries Power Ltd., acquired in July 2025, within just two months. A 500 MW PPA has been signed for this plant with Maharashtra DISCOMs for five years. Furthermore, Adani Power has secured new long-term PPA bids for over 9 GW, including 2,400 MW in Bihar, 1,600 MW in Madhya Pradesh, and 570 MW from existing capacity for Karnataka. These PPAs are crucial for ensuring stable revenue streams and reducing exposure to merchant market fluctuations.

Another significant development is the approval for Mahan Energen Ltd. to commence operations at the Dhirauli Mine in Singrauli, Madhya Pradesh. This will provide fuel security for the Mahan plant, offering logistical advantages. The Godda Power Plant is also expected to be connected to the Indian grid by December 2025, providing flexibility to sell power domestically under specific conditions.

Financial Strength and Investor Confidence

Adani Power's financial strategy focuses on maintaining a strong credit profile and high liquidity. The company has seen 8 notches of credit rating upgrades in the last six years. A substantial 88% of its 18.15 GW operating capacity is tied up under PPAs, and 81% of its domestic coal-based capacity benefits from long-term Fuel Supply Agreements (FSAs), ensuring fuel security. The company's capital structure is designed to be effectively unlevered, providing significant free cash flow to equity and enabling a self-funded capital expenditure plan.

Despite an increase in total debt to 47,254 crore as of September 2025, primarily for bridge financing of capital expenditure and working capital, the net debt position remains healthy at 36,776 crore. Management emphasized that strong cash accruals are being reinvested into capacity expansion, aligning with a disciplined capital structure policy.

Concluding Thoughts

Adani Power Limited's Q2 FY26 performance underscores its resilience in a challenging environment. The company's strategic focus on aggressive capacity expansion, securing long-term PPAs, and maintaining operational efficiency positions it well for future growth. With India's power demand projected to quadruple in the next two decades, Adani Power is poised to play a pivotal role in meeting the nation's energy needs, delivering industry-leading returns on capital, and enhancing energy security.