Sarda Energy & Minerals: Powering Ahead with Robust Q2 & H1 FY26 Performance

Sarda Energy & Minerals Limited (SEML) has reported a stellar financial performance for the second quarter and first half of fiscal year 2026, showcasing significant growth driven primarily by its energy segment. The company's consolidated revenue from operations for Q2 FY26 stood at INR 1,528 crore, marking an impressive 32% year-on-year increase. This robust top-line growth translated into even stronger profitability, with Profit After Tax (PAT) surging by 61% year-on-year to INR 328 crore in Q2 FY26. For the first half of the fiscal year, the performance was equally compelling, with PAT growing by a remarkable 90% year-on-year to INR 764 crore, surpassing the entire previous fiscal year's profit in just six months.

The energy segment has unequivocally emerged as the primary growth engine for SEML. In Q2 FY26, this segment contributed a substantial 47% to the consolidated revenue and an even more dominant 70% to the consolidated Earnings Before Interest and Tax (EBIT). This highlights the strategic importance and successful operationalization of the company's power assets. The IPP Binjkot (formerly SKS Power) thermal power plant demonstrated exceptional operational efficiency, achieving an average Power Load Factor (PLF) of 85% in Q2 FY26 and 85.27% for H1 FY26, significantly exceeding the annual target of 80%. Furthermore, the newly commissioned 24.9 MW Rehar Hydro Power plant in Q2 FY26 and the overall hydro power portfolio contributed to a 32% year-on-year growth in generation, supported by favorable monsoon conditions.

Strategic Expansion and Backward Integration

SEML's strategic roadmap emphasizes expanding its energy and mining operations to ensure long-term sustainability and cost optimization. The company is actively pursuing the doubling of generation capacity at its IPP Binjkot thermal power plant, a project expected to take 2-3 years for approvals and an additional 3 years for setup. This expansion will leverage existing infrastructure, making it a cost-effective growth avenue. In line with its commitment to clean energy, a 50 MW solar power plant is being installed in Chhattisgarh for captive consumption, projected to be operational by the end of FY26, which will replace costly grid power.

On the minerals front, SEML is scaling up its Gare Palma IV/7 coal mine, with plans to increase production from 1.68 MTPA to 1.8 MTPA in the current fiscal year, and further to 3 MTPA in the next 2-3 years. This ensures a steady and cost-optimized supply of raw materials for its integrated operations. The recent acquisition of the Senduri coal block in Madhya Pradesh, with production slated to begin by FY2033, further strengthens its backward integration strategy. These initiatives are crucial for maintaining raw material security and enhancing overall profitability.

Navigating Market Dynamics and Financial Strength

While the energy segment has been a clear winner, the metals business, particularly steel, faced challenges due to weak market prices and increased supply from primary steel makers. However, SEML's integrated business model allows for flexibility, such as diverting captive power for sale when steel margins are low, thereby safeguarding profitability. The company's focus on the domestic market for ferro alloys also contributed to better realizations despite global market volatility.

SEML's financial prowess is evident in its comfortable liquidity position and conservative capital structure. The company boasts negligible net debt-to-equity and consolidated net debt below INR 500 crore, making it a net cash company on a standalone basis. This strong liquidity, amounting to INR 2,231 crore, provides ample headroom for financing future growth opportunities. Furthermore, the company's external credit rating from CRISIL was revised from 'Stable' to 'Positive' in November 2025, reaffirming its robust financial health and promising outlook.

Outlook and Future Preparedness

Sarda Energy & Minerals is strategically positioned to capitalize on emerging opportunities, particularly in the energy sector. The management anticipates continued strong performance, with the solar power plant and Shahpur coal mine expected to commence operations in the near future, further bolstering revenue streams. The company's disciplined capital allocation strategy, focusing on reinvesting surplus cash into diversified, future-ready projects, provides clear visibility on its growth trajectory. Despite sectoral challenges in the steel industry, SEML remains confident in delivering record results for FY26, driven by its integrated operations, expanding energy portfolio, and strong financial foundation. The company's proactive approach to clean energy transition and waste-to-wealth initiatives also underscores its commitment to sustainable growth and long-term value creation.