Torrent Power Q1 FY27: Stable topline, merchant gas pressure, and a heavier build-out cycle

Torrent Power opened FY27 with steady operating momentum but a softer bottom line. Consolidated revenue from operations for Q1 FY27 came in at INR 8,124 crore versus INR 7,906 crore in Q1 FY26, a 3% year-on-year increase. Profit after tax declined to INR 662 crore from INR 742 crore, while profit before tax was INR 925 crore versus INR 985 crore.

Management attributed most of the year-on-year pressure to the thermal generation business, specifically lower gains from merchant power sales and LNG trading. In the earnings call, the company quantified this decline at INR 87 crore. It also highlighted higher operating and maintenance expenses linked to upgrades at gas-based plants. These upgrades are intended to improve flexibility and availability as renewable penetration increases and units are required to run in more cyclical patterns.

On the other hand, distribution and renewables provided offsets. Management said distribution and transmission together contributed INR 71 crore of incremental profit, helped by a favourable regulatory order approving carrying cost of INR 41 crore, operational improvements and higher returns under tariff regulations, and better franchise performance due to higher volumes and tariff. Renewables contributed an additional INR 19 crore, supported by new capacity and better PLFs, although comparisons were affected by the absence of last year’s late payment surcharge income.

The quarter in numbers

Tax also became a bigger factor this quarter. Management said the effective tax rate increased to 28% from 25% year-on-year due to completion of the section 80-IA tax holiday for some units.

Operations: better renewable PLFs, softer gas PLFs

Operationally, renewable performance improved in the quarter. For contracted capacities, wind PLF improved to 33.3% in Q1 FY27 from 31.6% in Q1 FY26. Solar PLF rose to 25.9% from 22.0%. In contrast, gas-based plant PLFs were lower year-on-year, reflecting both operating conditions and the economics of LNG.

Management repeatedly came back to one theme: gas remains relevant, but its role is changing. With higher renewables on the grid, gas plants have to start and stop more frequently and capture short peak windows. The company said it has been making flexibilisation changes and upgrades to enable cycling operations. In the call, it also noted that selling power with spot LNG at around USD 20 per MMBtu is challenging and feasible mainly in high-DAM peak slots rather than regular market hours.

For distribution, the presentation continues to position Torrent Power as a low-loss operator. In FY26, the company reported distribution loss of 2.33% in its licensed distribution areas with power availability of 99.9%. Its franchise model track record remains a key part of the equity story, with the presentation highlighting a reduction in AT and C losses in Bhiwandi from 58% at takeover to about 9.1% in FY26.

Strategy: a renewable ramp with transmission as the gating factor

The core strategic narrative is capacity expansion, with renewables as the engine. The company stated that installed operational capacity as of 30 June 2026 stood at 6,564 MWp and that the pipeline takes total capacity to 12,345 MWp. The mix is expected to tilt toward renewables as projects under development are commissioned.

The investor presentation also provides a segmental view for FY26. Transmission and distribution accounted for INR 24,764 crore of revenue, or 74% of total segmental revenue. Generation contributed INR 7,585 crore, or 22%, while renewables contributed INR 1,241 crore, or 4%.

Management gave unusually specific commissioning phasing for the renewable pipeline in the call. As of 30 June 2026, it said about 4.6 GW of renewable projects are under implementation, with commissioning expected progressively: about 1.0 to 1.2 GW in FY27, about 1.4 to 1.6 GW in FY28, and the balance in FY29. Within FY27, it indicated that after the 70 MW commissioned in Q1, about 400 MW is expected in Q2 and the remaining part in H2.

The key risk factor acknowledged by management is transmission readiness. Several projects have commissioning timelines that are aligned with onward transmission line availability. Management cited right-of-way issues and stated that it plans execution so that capex is not spent significantly ahead of transmission availability.

Capex intensity is rising accordingly. Management disclosed Q1 capex of about INR 2,300 crore, including INR 1,550 crore on renewables. For FY27, it expects around INR 10,000 crore capex to be incurred for renewable projects.

Nabha acquisition and storage: adding scale and optionality

A major portfolio change is the acquisition of the 1,400 MW Nabha coal plant in Punjab, consummated on 25 June 2026. Since it was consolidated for only about five days in the quarter, management said it contributed around INR 15 crore in Q1 FY27. For steady state expectations, management indicated EBITDA of roughly INR 1,000 crore per year on an adjusted cash flow basis, and noted that the plant typically operates at around 85% PLF.

On storage, Torrent Power is positioning pumped storage as the next leg. The presentation highlights a 3,000 MW pumped storage hydro project in Maharashtra with an estimated project cost of about INR 14,000 crore. It states that 2,000 MW and 16,000 MWh is tied up for 40 years with MSEDCL, with an SCOD of Oct 2028 and annual revenue of INR 1,680 crore.

In parallel, the company highlighted a 72 TPA pilot project for green hydrogen blending with natural gas in its CGD network. The disclosure is at a pilot scale, but it signals where management expects the sector to evolve.

Takeaways

Torrent Power’s Q1 FY27 results underline the stability of its integrated model and the volatility embedded in merchant gas economics. Distribution and regulated returns remain the foundation, while renewables and storage are the growth levers. The company has also been explicit that transmission availability can dictate renewable commissioning, and that discipline could shape the pace of capacity monetisation.

The next few quarters are likely to be defined by three monitorables that management itself emphasised: the cadence of renewable commissioning versus transmission readiness, the economics of LNG and merchant power during peak periods, and the integration and steady-state performance of Nabha as it begins to contribute across full quarters.