Sarda Energy & Minerals: Powering Ahead with Strategic Expansion and Robust Financials in Q3 FY26

Sarda Energy & Minerals Limited, a prominent player in India's energy, minerals, and metals sectors, has navigated a challenging third quarter of FY26 with resilience, demonstrating a robust operating performance for the nine-month period ended December 2025. Despite facing planned operational shutdowns and a period of subdued commodity prices, the company's integrated business model and strategic execution have allowed it to maintain stability and deliver growth. The consolidated revenue for Q3 FY26 stood at INR 1,276 crore, a slight decrease of 3% year-on-year, primarily due to these anticipated operational events. However, the company's EBITDA for the quarter increased by 7% year-on-year to INR 395 crore, reflecting strong underlying operational efficiency and the growing contribution from its energy segment. For the nine-month period, the company's performance was even more impressive, with Profit After Tax (PAT) surging by 59% to INR 954 crore.

The energy segment continues to be the core earnings driver for Sarda Energy & Minerals, contributing over two-thirds of the consolidated EBITDA in both Q3 and 9M FY26. This segment's performance, while impacted by seasonality and planned maintenance in Q3, showcased significant growth over the nine-month period. Hydropower generation, for instance, increased by a remarkable 28% year-on-year to 621 million units, bolstered by favorable monsoon conditions and the commissioning of the 24.9 MW Rehar Hydro Power Project. This project has secured a 40-year Power Purchase Agreement (PPA) with Chhattisgarh State Power Distribution Company Limited at a tariff of INR 7.42 per unit, ensuring long-term revenue visibility. The company's mining operations remained steady, fulfilling captive fuel requirements and strengthening integration across the value chain. Meanwhile, metals and alloys operations maintained stability with volume resilience and a continued focus on cost efficiencies, despite a moderate pricing environment.

Strategic Imperatives and Capacity Expansion

Sarda Energy & Minerals is firmly on a path of strategic expansion, aiming to build a diversified, future-ready enterprise anchored in energy, minerals, and sustainability. A key initiative involves scaling up the SKS Power (IPP Binjkot) operations, which currently operates at an 81% Plant Load Factor (PLF) and contributes significantly to EBITDA. The company is pursuing approvals to potentially double its capacity, a process expected to take 2.5-3 years for environmental clearances. Additionally, two new PPAs have been signed, enhancing medium-term revenue visibility for the energy segment. In mining, the company is in the final stages of receiving approval to enhance the capacity of the Gare Palma IV/7 Coal Mine from 1.68 million tons to 1.8 million tons, with increased output expected within the current financial year. The development of the Sahapur West high-grade coal mine is also on track for commissioning by the end of FY27, ensuring a reliable and cost-efficient raw material supply.

Advancing Clean Energy and Sustainability

The company is making steady progress on its clean energy initiatives, aligning with long-term cost optimization and sustainability objectives. A 50 MW captive solar project is being installed in Chhattisgarh, expected to be operational in Q1 FY27, which will replace costly grid power for captive consumption. Furthermore, the company is actively expanding its hydropower portfolio, with projects totaling 75 MW under various stages of implementation. Beyond generation, Sarda Energy & Minerals is leveraging automation and advanced process controls to enhance productivity and reduce costs across its plants. The company is also committed to a 100% waste-to-wealth agenda and expanding renewable and EV adoption to lower emissions and strengthen ESG outcomes, including replacing diesel vehicles with EV alternatives.

Financial Strength and Outlook

Sarda Energy & Minerals maintains a robust financial foundation, characterized by a strong liquidity position of approximately INR 2,300 crore and low leverage. The consolidated net debt significantly reduced from INR 1,500 crore as of March 2025 to below INR 500 crore as of December 2025, with the company remaining cash positive on a standalone level. This strong financial health, coupled with a CRISIL AA-/Positive/A1+ credit rating, provides a solid base for future growth. The company's growth initiatives are largely funded through internal accruals, reflecting disciplined capital allocation. Management anticipates a positive outlook, with steel prices showing signs of recovery and thermal power prices expected to rise in the summer season. The capex for FY26 is projected to be between INR 550-600 crore, with similar expenditure planned for organic opportunities in FY27, underscoring the company's commitment to sustained expansion and value creation.

Sarda Energy & Minerals Limited is strategically positioned to capitalize on the decade-long opportunity presented by a strong policy push, infrastructure-led energy transition, and rising resource security. The company's disciplined approach to deploying surplus cash into diversified long-term growth projects provides strong medium-term visibility and reinforces its commitment to sustainable value creation, promising a promising outlook for growth.