Adani Energy Solutions Limited (ADANIENSOL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 NFI 26 earnings conference call, hosted by Adani Energy Solutions Limited. From the AESL side, we have the following on the call as main speakers. Mr. Kandar Patel, CEO. Mr. Kunjal Mehta, CFO. Mr. Prashant Soni, Head Finance. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Prashant Soni from AESL. Thank you, and over to you, Mr. Soni.

Thank you. Thank you, Ryan. So, thank you and very good day to everyone. A warm welcome to the Q4FY26 earnings call from AESL. We hope you had an opportunity to review the earnings presentation and final results that we shared on our website. To outline the flow of today's call, we will begin with the opening remarks from our CEO, Mr. Kandab Patel, following which we will open the floor for Q&A. The call will conclude with closing remarks from CFO, Mr. Kunjal Mehta. For those who wish to ask questions, we request you to start joining the question queue a little in advance to help us manage the Q&A efficiently. Thank you. And with that, I would like to hand over to Mr. Kandab Patel for his opening statement. Thank you. All to you, sir.

Good morning, everyone, and welcome to all investor and analyst friend on this call for Q4 and FY26 of Adani Energy Solution. Well, you must have received all the material in terms of our accounts and financial performance and also operational performance. But I would like to highlight a few points that are very distinguished points. We probably may not have been emerged out very clearly from finance. So obviously, this year, besides many other projects, we have commissioned that Mumbai actually seen projects. Which is not only in regulatory asset-based project, but it is also very, very important for Mumbai transmission capacity augmentation. It will also help AEML in integrating more and more renewable for our distribution company. Another significant milestone that we could complete, achieve this year was deployment of smart meter on the ground. While we anticipated or we projected that we will be doing about 70 lakh meters this financial year, we surpassed the target and we ended up installing about 83 lakh meters on the ground. That is probably the... This is the highest number that any operator has achieved, not only in India, but probably also on a global basis. While we continue to do all this project execution on the ground, there is a significant shift or change that is happening at AESL level. Well, you must have noted that the... CAPEX or AEML, consolidated CAPEX, transmission, distribution, smart metering, has increased significantly over a period of time. We have now reached close to 15,000 crore CAPEX. We will continue to improve the CAPEX and reach about 20 crore CAPEX this year. But while we are improving CapEx, you also must have noted that there is a significant improvement that is happening on a credit rating side. So now most of our assets are AAA, and there is a significant improvement in credit rating while we are scaling up the CapEx. So, usually it becomes even challenging to maintain the... Credit rating value are significantly stepping up a capex, but we have done it otherwise. We have improved the credit rating, and consequently, our interest cost is also going down. Now, even in the challenging time, volatile time, if you are in a position to improve credit rating and reduce your interest cost, that's a significant achievement from AESL side. And that would mean that incremental return for shareholders. Now, similarly, with HVDC commissioning and the regulatory asset base capex that we continue to do at AEML, Now, when we took that AEML, the RAP was about 5,400 crore. Today, you must have seen that it has reached to 10,500 plus crore. Similarly, in transmission as well, the RAP-based asset was about 10,000 crore. Now, we have added 7,000 crore of HVDC. And we will continue to make sure that proportion of regulatory asset base and competitive asset base remains healthy. And that is driving our growth and cash generation. And with this, we have been able to, you know, do the refinancing of our 500 million And that we refinance from Apollo, who is U.S. insurance investor. Now, that gives us, you know, confidence that even during this challenging geopolitical situation, we have been able to leverage our financial and operational strength and do the refinancing. Similarly, on a smart metering, we will continue to scale up our operation. We think that smart metering business is not limited to our contractual period, but it is a perpetual one, given the industry structure. So, we believe that this opportunity is going to continue even when those existing concessions expires. Maybe in terms of expansion or new bidding opportunities. And with the capabilities that we have created, we certainly are in a much better footing to take advantage of future opportunities. Similarly, on the transmission side as well, this year we have improved the market share. We have reached to now almost 29% of the project that went into bidding. And there are about 150,000 crore projects already identified for the bidding. Simultaneously, as I mentioned, we are scaling up our capability in deploying capex on the ground, and we will continue to do that with the improved interest cost and with the improved capability of deploying capex. That will give us an opportunity to capture a larger amount of opportunity, transmission opportunity in the market. On the operational side as well, we have been doing consistently well. This year as well, the O&M availability has been 99.7. Similarly, on the distribution side as well, we have been consistently able to reduce our distribution losses. So all in all, the distribution loss has already reached to 4.2%. In fact, we started with 8.5% and we have reached to this level. The significant thing that is going to happen from a growth side besides transmission and smart metering will be C&I segment. So we have started that operation. We have now closely about 5,000 megawatt of renewable capacity contracted. We are already having about dozens of third-party consumers of about aggregating of about 1,400 megawatt capacity. It will give us a great lever in capturing that market, which has a huge potential, including those data centers coming up in India. So all in all, C&I will also become one of the major growth drivers in the next year, and we will have a detailed presentation on C&I once we complete the next financial year and have this call again somewhere in May next year. And we will lay out what are the kind of activity there that we have been able to do it in C&I. So, all in all, in all our segments that we operate, whether it is transmission, distribution, smart meters, or CNR, we see a great potential there, a great opportunity, and since we are improving capability of CapEx deployment and with a discipline in capital management and CapEx deployment, we will continue to capture those opportunities. With this, I will hand it over to Kunjal for...

No, I think we can now start the questions from the analysts of the investors.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Mohit Kumar from ICICI Security. Please go ahead.

Hi. Good afternoon, sir. Good afternoon, sir. And thanks for the opportunity. My first question is, can you help us with your expectation for CapEx in FY27 and FY28 for three businesses separately?

Yes, sir. So, we will have about 22,000 crore of capex next year, of which transmission would be about 15,500, distribution about 2350, smart metering about 3,900, And, so, these are the numbers. So, we will be around 21,000, between 21 to 22,000. So, this is for FY27, right, sir?

Is it possible to share the FY28, or it's not possible as of now?

No, no, it is possible, but that number will be a little approximate, but it will be around 23,000. So, of that transmission would be about 20,000. Distribution again will be about 2,000. And smart metering, given the order book, we are not assuming the additional one. But given the order book, it will be 1,500 and whatever the additional order that will come will get added. So, somewhere between 22,000 to 25,000.

Understood, sir. My second question is, sir, is it possible to share the expectation for capitalization or commissioning in FY27 and FY28? And can you please, sir, help us understand whether you have included the Mumbai HVDC completely in FY26? Is that the right understanding?

Yeah, so Mumbai, the commission in FY26 only, in the last month, yeah, completely, yeah, 100 percentage, and the capitalization number in FY27 would be about 21,000, 21, 22. In FY28, it could be about $13,000, and thereafter, the capitalization will improve, especially in transmission, because those HVDC projects, that will start getting commission from FY29.

Right. Understood, sir. Thank you and all the best, sir. Thank you.

Thank you. We take the next question from the line of Manish Odswan from Nirmal Bank Securities Private Limited. Please go ahead.

Yes, sir. Thank you for the opportunity. I have a question on the balance sheet leverage. So, sir, if you look at our cash flow for the year 26th, we have operating cash flow of 10,000, almost 11,000 crores, and we are having capex of 14,431 crores. So, effectively, our free cash flow negative 7,000 transcended costs. So, what is your view of the balance sheet leverage? Where we are comfortable? Can you guide us on that venture? That would be helpful for us.

So, that's common operating cash flow. So, you would understand is that most of our assets, we generally finance it in the ratio of 70 to 30. So, only the equity portion is funded through the internal accruals. So, balance is tied up to the dates. From that position, we are fully comfortable to meet all our existing CAPEX requirements in transmission, smart maker, and even distribution.

Thank you. We move on to the next question, which is from the line of Dhruv Muchal. Please go ahead.

Yes, sir. Thank you so much. Sir, can you help me, what is the capitalization for FI26? And if you can also break it up between transmission, what is in transmission?

So, 26 is about 15,000, 50,300. Transmission is 10,260. Distribution 1511 and Smart Bittering 3556.

And, sir, also one accounting thing is, what would be a CWIP be in a normal accounting term at the end of FY26B, overall console CWIP?

So, uh... So, between the SE assets and the normal conventional assets, so if you look at the financial, the current CWIP is around 2,053 crores, which is for the non-SE assets, and for the currently, we are currently having SE assets of about, I'll just give you the numbers.

Because now the accounting has changed, so it's become a bit confusing.

Yeah, yeah, yeah. So, SCSS is currently around 6,200, and the CWIP is around 2,500.

So, broadly, 8,000 crores of CWIP. And, sir, just trying to, you know, combine the math, and you're guiding for a capitalization of about 15,000 crores in transmission in next year, FI27. So what we generally see is what your CWIP is at the end of the year, probably gets capitalized at the end of the next year, the typical cycle in transmission. So, but your guidance is much higher. For example, for your transmission guidance, there's about 15,000 crores next year, capitalization guidance. And assuming all the CWIP is for transmission, that's about 8,000 crores. So I'm just trying to, you know, reconcile the math.

Yeah, but there would be a capex which will be inferred during the current financial year as well, which will also get translated into capitalization. So, it, I mean, there's two. Give you a perspective, especially in transmission assets, what happens is that certain types of transformers or certain types of substations are generally procured during the FAG end of the asset, and that gets capitalized immediately. And this is exactly what happened in case, if you note, in HVDC project as well. So, it is just at the last period when you procure heavy equipment, which gets capitalized during that financial year, and which does not generally form part of CWIP or your assets.

So, through next year also, means in the current year, we plan to do a transmission capex of about 15,000 to 16,000 and 8,000 of this WIP. And out of this total block, we plan to capitalize about 14,500 to 15,000.

All right. Sure. Perfect. Two macro-related questions. In some of the government documents, the transmission committee meetings, what we're seeing is they've started to talk about batteries, the higher cost of transmission, particularly it seems the HPDC lines, and they've started to compare it to batteries and all those. How should we see this? Is it the cost becoming a challenge or the integration becoming a challenge? I mean, why do you thought? Just trying to understand how we're seeing this.

Now, obviously, that debate is going on at a policy level as to how much of transmission capacity that country should add because it also has a cost implication, especially for renewable projects. So, the debate is that... Should we push as a sector the installation of more co-located base so that transmission cost could be optimized. But see, what is happening is that that's a one leg of transmission, but whatever electricity is generated, that also has to get distributed and taken to the last mile to the end consumer. Now, in future, what we see, well, the interstate transmission line will continue to get crystallized and come into bidding, but we expect to see lot more activity from a state side, because all those transmission corridors which are created or which are being created for taking renewable energy to load center, Now those investments are required to be made at a state level to take it to last customer. So we see a lot of opportunity coming from state side as well. And you must have seen in last year, there are few utilities or state who has already started bidding for multiple projects like Maharashtra, Rajasthan, Uttar Pradesh, and even Karnataka. So we see a lot of action coming from those states as well.

So basically, just to understand this well, a larger portion of the ISTS evacuation is done, now it is more about optimization, and the activity to a larger extent shifts towards the intrastate network.

No, I am not saying that it is already done. There will also be... If we, as a country, we are in a position to install base at a massive scale, then probably that quantum might come down to a certain extent, but it is not completely done.

Yeah, sure. Got it. And so last thing, on the CNI, you mentioned about 5G or TOF tied up and the data center-led demand that you can cater. Just trying to understand, it seems the government is also looking at, state governments are looking at giving distribution licenses to these large hyperscalers. So how does it position us in that thing? I mean, can they still come to you for that round-the-clock power or they do it themselves? I am just trying to understand our positioning then.

Certainly, even if they become a distribution licensee, they will have to source power, and because their requirement of power will be very, very peculiar, that is where we come in, especially from power infra side as well as from supply side. So now we having got capacity of solar, wind, as well as base with us, we are in a position to offer that kind of a solution to whether it is a customer or a dim distribution licensee given to a customer. So essentially it remains a customer.

And this 5 giga odd that you have tied up is, I mean, you have reached this capacity for yourself, and then you find your customers, for example, 1.54 you have already found, and the remaining you will find it now.

Correct, correct, correct.

Shwar, it will be helpful to understand more on this E&I as you share more. Thank you so much.

Thank you. We take the next question from the line of Manish Somaya from Cantor Fizchera. Please go ahead.

Good morning. A couple of questions. The first one is on smart metering. The installation rate was quite impressive in the fourth quarter. So I was hoping you could help us understand how we should take about 2027. And also, when I look at the book of business that you currently have, which is around $24.6 million, you can just help us get a feel for sort of the next time you'll have an opportunity to do more tenders, and when do you expect for that number to really increase?

So, uh, uh, uh. Money is... So next year, probably we'll be doing about minimum about one crore meter. Having done 83 lakh meter in the current year, we are confident that we'll be able to install another one crore meter in the current financial year. As far as next opportunity is concerned, you must have seen when we started, the concessions were about 2.3 crore, but now we have reached to 2.5. Essentially, there are two ways of getting additional concessions here. One is that in an existing contract itself, it has fell to 2.5, 2.3. And the balance opportunity which remains in the market is about 9 to 10 croon meter. There are few states who are... We are awaiting their approval from the central government under RDSS, and those states are Karnataka, Tamil Nadu, Tamil Nadu already has approval, so now they have to come out with a bidding process. Probably they will come out once their elections are over. So the opportunity remains are Tamil Nadu, Karnataka, whole state, Telangana whole state, Andhra Pradesh part, Gujarat part, and MP part. So, these are the opportunities which are still pending in the market.

Okay, that's super helpful. And then on the distribution side, UBIT was down about 14%. So, when we saw up, losses obviously improved. So, maybe I was just hoping to get some comment from you as to how we should think about distribution in fiscal 27. I'm a financial measure.

Good morning, everyone. Do you have that similar amount of capex in distribution? See, distribution, what is happening is that in AEML, we continue to harden the asset, so we continue to add about 1,500 to 2,000 crore capex every year. And we are also making sure that our tariff remains the same, almost at the same level. And that we have been able to do and we will continue to do by improving operational efficiency. So, effectively, what we are doing is that all efficiency gains are transferred for investors for incremental return because we continue to add that. So, it's a win-win for customers as well as shareholders. So, shareholders' returns are improving, but customer tariffs are remaining same, and service levels are also improving significantly. And that's the reason why AVML has been rated number one distribution company in the country since last four years now.

And then just lastly on transmission, I think you talked about the Mumbai HVDC coming online fully. Can you just help us quantify the EBITDA run rate contribution from some of the projects that have come on in fiscal 26 into fiscal 27? And then just a related question to that, the pending opportunity that you mentioned of would be $1.5 billion. How should we think about the wind rate as we model out?

Sorry, Manish, how should we think about the

win rate or the tendering opportunities that you have,

should be assuming a certain percentage. So, Manish, currently we are about, in fact, we were about 20-25 percentage. We have improved this year to close to 30 percentage. So, we will continue to maintain that market share between 25 to 30 percentage. While we can also increase market share, but as I mentioned, we will make sure that we remain disciplined both in terms of capital management as well as capex deployment. This is an area where we don't want to compromise, so we will limit ourselves to 25 to 30 percent, and that will also be converted into amount, it will be 40, 50,000 crores of new opportunity for us in a transmission itself.

And Manish, to the first question, this year, the capitalization which has happened for transmission, on fully run rate basis, we will be able to add another 1600 crores of EBITDA, around 1600, by those commissioning of existing projects which have been commissioned in this financial year. I am talking about the 1600 is the revenue number.

Okay. And then just maybe for Kunjan, last question in terms of leverage with CapEx going higher, are we still comfortable with the four to four and a half times or should we expect that two inch a little bit higher?

No, we'll continue to maintain that leverage in the ratio of around 4.5 to 4.7.

Thank you so much, and good luck in 2017.

Thank you. We take the next question from the line of Mohit Kumar from ICISI Securities. Please go ahead.

Thanks for the opportunity once again. So my question is on the Mumbai HPDC, which is your commission. How do you expect to book revenues in the F-27? Will it be at lower project cost in the sense it will be booked at provisional tariff or it will be booked at the full project cost?

As you know, this is a RAP-based project, and once the tariff is accrued by the regulator, you are entitled to start billing to the regulator. So currently, the number is 1,300 odd crores, which is the full year tariff from the Mumbai HVDC project, which we will start accruing from next financial.

My second question is, of course, it was regarding HBDC-Pole 2 of Pumbaya. We understand that, of course, the state transmission committees had approved it, right, and recommended it to the Empowered Committee of the State. Have you heard anything on that? And is it fair to expect that HBDC-Pole 2 start working from this fiscal? Thank you.

As far as HVDC poll 2 is concerned, the evaluation at MERC and STU level is going on. We feel that Mumbai will certainly require additional transmission capacity. But we can't commit currently because that's still under the evaluation at MERC and STU level.

Understood. My second question is, sir, can you help us with the progress on the two HVDC projects which we are working on right now in terms of percentage completion? And could you also address the ROW challenges if you are facing any?

So, as far as Fatehpur-Badla HVDC is concerned, the construction has already begun, both at a substation and a line level. And we haven't faced any significant ROW challenge as far as that project is concerned. As far as Khawda Orpadi is concerned, we have finalized all the contracts. But the construction has yet not started. It will start. So the Khaavra land is now already under the possession. Land at Olpard, we expect to get possession from power grid in maybe a month's time. And once we have that, we will start construction at both the places. The preparatory work at Khaavra has already started because that land is already in possession. And we have already submitted those proposals for environment and forest clearances because that will also become a significant part. We have already started applying for the ROW permission, so those compensation orders from state government. So, currently, it's progressing as per plan. You will see a lot of action on ground on both the projects in the current year.

Is it possible to share the percentage completion for Fatehpur Badla? How much percentage have completed till date?

I don't have that number ready-made, but we will send it.

Sir, but Muspati is here to understand that most of the capex will happen in F-27 and F-28 for Fatehpur-Badla?

Yes, so the capex in Fatehpur-Badla will start, significant capex will start from current year.

Understood, sir. My last question is, sir, is it possible to share the... Margin profile for the trading business, especially on the 1.5 gigawatt, and when do you expect the 1.5 gigawatt to start contributing to the top line?

So the 1.5 gigawatt that we have already tied up, the margins are in excess of 50 paisha per unit. Race we are still working, so once we tie up that capacity, either on a medium-term or long-term contract, then those numbers will get crystallized. Currently, we are operating on a merchant market, and that depends on the market condition, which is varying on a day-to-day basis.

Is it right to say that the margin profile currently is lower and you will improve once we start selling into the market?

So, I would not say it is lower, but you will get more certainty once you have a contract.

Understood, sir. Thank you, sir. That's very helpful. Thank you.

Thank you. We take the next question from the line of Sriram Kapoor from Jeffrey's. Please go ahead.

Hi, thanks for the opportunity. I just had a small bookkeeping question. So you're operating operational EBITDA for your smart meters business. So nine months, FY26 in the presentation showed about 466 crores. And for FY26 full year, it's showing us 452 crores. Though for the fourth quarter, it's showing over 180 crores. So has there been some kind of restatement, you know, in your operational EBITDA? And if you could quantify that for the past three quarters, like what would have changed? Uh, in those numbers.

So, just that the operating EBITDA is purely a function of the number of meters that gets installed. From that perspective, every quarter, that number will keep on increasing. So, there is no restatement as such. It's just that we show both the numbers in our financials, the India-S numbers as well as the non-India-S numbers.

Right, I'm referring to the non-NAS numbers itself. Your operational EBITDA in the nine month of FY26 totally was 466 crores, but your total full year FY26 is 452 crores. But the fourth quarter wasn't a loss, right? Fourth quarter itself was 180 crores of operational EBITDA. So, that's what I'm understanding. Then this number implies only about 270 crores in nine-month FY26 versus 470 crores that you mentioned in your nine-month presentation. That's the kind of discrepancy I'm asking about, if you could clarify that.

No, so my operating EBITDA for the full year comes to around 593 crores for smart meter business. And for the Q4, it is 214 crores.

I'm referring to non-NDS numbers. That's where I'm seeing the discrepancy.

So I'll have to check that from where you are getting nine-month number.

It's in your presentation, the nine-month presentation, slide 10. We can take it offline. That's okay. Second, my next question is on this 1.5 trillion tender pipeline. So is this entirely an opportunity in the next 12 months, or if you could give what the 12-month pipeline number would be?

So, 12 months would be about 80,000 to 1 lakh crore, depending on how bidding process, you know, proceeds. But we expect that bids about 80,000 to 1 lakh crore will get finalized.

Got it. But could you give this, you know, what this 12-month pipeline would have been at the same time last year? Has it, you know, increased?

It has almost remained the same.

Remains the same. Okay. And just a last clarification on the SCA assets that you mentioned. This would be, you know, 6,200 crores of SCA assets. That would be, you know, accounting-wise part of your gross block number, right? And the 2,500 crores you mentioned would be part of CWIP. This is beyond what is your reported number. Is that understanding correct?

No, so SCA gets reported separately as under, you know, non-financial assets, but.

Right, so that's the number you mentioned, 6,200 crores, that would be the already the operational asset in 2,500 crores is yet to be operationalized, right? Is that understanding correct? These are both part of your other financial assets, but this would be the breakup for the SCA assets on the smart meter side.

So once. So, one is contracted assets and one is SC assets. Once the asset gets, I mean, once the asset gets commissioned, that forms part of your contracted assets. And once it forms, I mean, once it is under constructed, it forms part of your SC assets. And both are part of non-financial assets.

Sure. So, could you give that number that in your other financial assets right now, how much is already the contracted asset and how much is under construction?

$6,200 and $7,000.

$6,200 and $7,000. Correct. Okay. Got it. Thank you so much, sir. I appreciate the clarifications.

Thank you. We take the next question from the line of Mahesh Patil from ICIC Securities. Please go ahead.

Hi, thanks for the opportunity. First question is on the interstate opportunity. So what do you think, like annually, what's the pipeline and what kind of bidding number that we are looking at?

So, interest rate would be around 30,000 to 40,000 crores collectively all state together annually.

Okay, my second question is on the HVDC, Mumbai HVDC project. So we mentioned that we commissioned it fully in FY26. So is it possible to share the date? Was it a single date or the different elements were commissioned at different point of time?

It was a single date. We commissioned on as from 15th March.

Okay, and so the cost remains as 7,000 crore, right, for tariff and everything. No additional cost or tariff is being claimed here.

So 7,000 is the cost of completing that project.

Okay, thank you.

Thank you. We take the next question from the line of Ram Jaya from J.P. Morgan. Please go ahead.

I have a question regarding the smart meter, smart meters installed. Your, how much is the number of, okay, last year, smart meters?

80, no, no, no, last year we installed 82.20 lakh, 9 lakh, smart meter, in 26.

Okay, sir, your media release, page 3. It says we have deployed 1 crore smart meters.

So it's all aggregate till today. Yeah, yeah, it is all aggregate till today. So last year when we began, there was about 31 lakh smart meters, which was installed. In the current year, we installed about this 80, 2.20 lakh meters. So the aggregate is that number. Okay, thank you.

Thank you. We take the next question from the line of Bharat C. Shah from BCS, Capital Ideas Ltd. Please go ahead.

Yeah. Hi, Kundal Pai, and hi, Kundal. One broad question. Given the fact that the opportunity on transmission now clearly seems to have widened, and it is also reflected in our TPEX program, our distribution assets are doing a steady progress and helped by addition of new RAD assets. But our smart meter is a high-growth opportunity, at least for some length of time. And maybe at some stage, E&I will kick in. In that group, if I look at, and I'm focusing on operating profits, that is, profits before adding any other income. So, our profits for the four-year period have remained range bound between... 4,000 to 4,500 crores each year between financial year 19-20 up to 20-23. In that four-year period, it has been in a range of 4,500 crores. Then, clearly, we've made a break in the subsequent year, approaching closer to 6,000, then in 25, 7,000, and now 26, about 8,000. Thank you. Well, definitely there is a progress made in the last three years, but it puts it, I think, more correctly reflective of opportunity and our own preparedness and strength in the area where we see far more accelerated growth in our operating profits. From 8,000 crores for the last year's operating profit, at what step do we see doubling of that, and in what time period we think it will triple?

Thank you, Bharat, for this question. So, this year, last year, the consolidated number was 8,726, and See, our business, other than C&I, is all capex-based business, and the moment we capitalize, we add that profitability, and as we discuss the capex and capitalization plan for coming year, that will directly translate to addition of EBITDA. So, next year, given the capitalization plan, we expect that number could be around 11,500.

So, as you know, generally, as management, we would not give guidance on the EBITDA numbers, but as we mentioned, is that there is a significant capex capitalization which is going to happen during the next two years itself. And if you consider that during this financial year, we have just added, I mean, we have not added any revenue numbers from the Mumbai HVDC year, which is a significant increase when the full year numbers will be kicking in FY26. So, from that perspective, and if you consider the locked-in portfolio by the end of four years, when all these projects would get fully commissioned, we are at least looking three times the size of the current EBITDA trajectory that we have. Sorry, three times in what time? Once all the existing transmission projects get completed in the next 36 to 40 months.

I see. So, in three to four years' time, Voto is operating profit of about 8,000 crores and EBITDA of a little less than 9,000 crores last year. We are seeing it should triple in three to four years' time.

Yeah, once all these projects, because all these projects have the locked-in tariff which has been indicated, and all these projects on a run rate basis, we'll start then tickling all these numbers that we just mentioned.

And that takes into account, all of, that takes into account some amount of additional smart meter contracts that you may take, or based on the current contracts only that you are estimating?

Based on the current smart meter contracts of 2.46 prometer. All right.

Which means essentially that what is about 8,000 operating profit and less than 9,000 to 8,700 odd EBITDA should be in the corridor of 25,000 to 27,000 in three to four years' time.

I would not, I mean, I am just saying is that all the tariff numbers would get sticking. I do not want to put a number today on the EBITDA margins because I don't, we generally do not give a guidance on the EBITDAs to, on the investors. But I am saying is that all the transmission projects would get completed and that itself would translate to two to three times of the numbers of the current numbers.

Okay. I appreciate your being very coy about the guidance, because these are predictable assets, predictable timelines of execution, and we know what are the rate of returns that we have to earn on that. So there is a fair degree of settled clarity as to what the number should pay up.

That 72,000 of the under construction pipeline would translate to an additional tariff of 10,000 odd crores once this entire project gets completed. You know that the distribution business will have currently 2,500 EBITDA, which will translate to close to 3,000, 3,200 numbers. And Smart Meter business will also start generating 2,400 to 3,000 odd crores of EBITDA trajectory once the entire Smart Meter profit, I mean, the number. I mean, that's the guidance which we have been giving to everybody and we'll continue to give that. Oh, okay.

I appreciate it. I just wanted to basically hear and understand that finally a range-bound kind of corridor in which we were there for a length of time. Clearly, last year, there's been improved progress, but tail-away progress is what I was looking forward to, and I believe now this is the phase which is commencing for that tail-away growth, right?

Thank you, everyone.

Okay, and is the picture more sedate thereafter, after these three to four-year corridor is over, or given the longevity of the transmission opportunity, and hopefully other things which will play out, like you talked about, C&I, and hopefully distribution game may open up. Well, would we say that the pace of our expansion of Kandabai would continue thereafter, is it?

So, obviously, we would like to continue that way. And you are spot on. Currently, it is a transmission which is contributing to growth. It could be C&I after some time. Then it could be a distribution after some time. And the other one that we are incubating is district cooling. Probably that will also start picking up in four or five years' time. So we'll all continue to have that aspiration of growing, but with the financial discipline and execution discipline as well.

All right. One last thing, Kandar Bhai. For districting the opportunity, I believe we are doing something in Gandhi Nagar. But overall, with large new clusters are coming about of development across the country, are we not looking at tying the proportionate at the early stage and figuring out a solution while those large mega clusters are being developed anywhere in the country?

No, I think that is where we are working very actively. In fact, we have just got a concession. I mentioned in last call as well. We got a concession from one of the cluster development happening in Chennai. Now, we are also talking to various state governments. So, we see a great opportunity there. It may not be sizable today, but going forward, we think that it is going to be a big one. Okay. Fantastic.

And happy congratulations. I think probably the most exciting phase of this opportunity, probably, as I say, it is begun.

Perfect. Thank you. Thank you for that.

Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. We take the next question from the line of Nirmal from Ajitya Bill, Last Time Live, AMC. Please go ahead.

Thank you for taking my questions. I have two small questions on the transmission model next. I just wanted to understand to what extent do you see the revised compensation scheme, especially after the latest revision, positively impact and resolving the ROW issues this financial year? And is it just the compensation that is impacting ROW issues, or there are other issues as well?

So, there are two kinds of ROW. One is where you require a permission. So, essentially, it is like a forest clearance. Or if you are encountering any wildlife sanctuary, then those clearances. And there is a sad process around it. And we have also, you know, completely structured that particular process in a way that we now know very clearly as to when are we going to get. And our team is fully, fully aligned to the process or the requirement of the process for getting those approval. So, and the second part is ROW from the general public, where there is ownership of the land from farmers or individuals, and there those government policies come into play. Many a time, we see that despite having a collector order for compensation as per the government policy, few of the individuals or group of the individuals will still create a problem. Even now, all the governments, state governments, as well as central government is very serious about this particular problem. And they are also trying to systematically sort this out. We have also seen now police protection being utilized very frequently for getting ROW. So these challenges are there on the ground, but we also see that timely action from various government authorities as well to sort those issues out.

Okay, and do you see the revised compensation impacting positively this financial year?

So, revised compensation, if it is revised by government and we have to pay the additional compensation, we are neutral to it because that gets covered into change in law. But I don't see it is getting revised significantly anytime soon.

No, sir, I meant the new amendments that are there. So now you need to have a committee, the market review committee is there. So whether do you think these new amendments will help in resolving these issues? That's what I'm trying to understand, especially this financial.

It is already there. It is not new one. The last year, last to last year, when government of India notified that policy, and when all states started notifying their respective policy, they had this provision. And in fact, they are called DELBC committee. So they assess what is the market rate prevailing in that particular area, and decides compensation based on that. That also gives a flexibility. You know, sometimes it happens that in a particular area, your Eddie Rekner or a Jantri rate is low, but market price is high, and then those committees intervention becomes very, very useful. So it certainly helps us.

Okay, sir. Thank you for the response.

Thank you. We take the next question from the line of Vishal Bilaya from Bandhan AMC. Please go ahead.

Hi. Any equipment that is being sourced from China or you plan to source from China which is in the short supply in India?

Vishal, we can't source equipment from China

on behalf of your EPC suppliers and equipment contractors on behalf of your transmission.

No, so as per conditions of the build, we can't use any equipment manufactured in China if it is through TBCV. So we don't envisage any such import from China for our TBCV projects.

Perfect. Thank you, sir. That is very helpful. And one question for Kunzilbhai.

Just to add one thing, on a supply side, the kind of challenges that we are facing as a sector in the country is easing out. In fact, a lot of new capacity is being added as far as GIS, transformers, reactors are concerned. And all those OEM manufacturers has also started. Thank you. We had a very different, distinct advantage. Even in a difficult period, we were not really facing that challenge because usually we buy through strategic procurement, and we have that kind of relationship, and we order those equipment well in advance so that we don't face those challenges of equipment getting delivered delay. In fact, no project of AESN got delayed because of delay in equipment delivery.

That is happening to you, sir. Thank you.

Thank you. We take the next question from the line of Bharat C. Shah from BCS, Capital Ideas Limited. Please, go ahead.

Yeah, just one more thing, Kunjale. The borrowing level, I think, for the last year in aggregate was, I think, about less than 50,000 crores. Four years down the line, what kind of borrowing level do you envisage?

Sir, I don't have an absolute number about four years borrowing level, but we have been always giving our guidance that our net leverage would be in the range of 4.5 to 4.7 times. So, we will continue to maintain that financial discipline, we will continue to maintain to ensure that we always get the highest ratings for all our transmission projects. So, from that perspective, we will ensure that our leverage is always in check to ensure that we have the highest ratings overall.

But Kunshal, if this is going to be a high-growth phase for our profits, the projects will kick in. Therefore, if we assume the same 4.5 to 4.7 times, then it will appear that our borrowings also would go to 125,000 to 150,000 crore, which I think based on the yearly cash flows and other things, I doubt or given the CAPEX requirement that our borrowing level will be hitting that kind of number.

Sir, I'll walk you through separately about our data borrowings programs for the next 4-5 years, especially at the end of 4 years, especially at the end of 4 years.

But, one of the two things is certain that we are not reaching that number, 4.5 to 4.6, and second thing is also certain that we have logged in capex of 77,000 crore.

In the 4-year period?

Yes, yes.

Yeah, that's what I, that I understand. Only Kandabai, given that kind of a pace of about 20 or 1,000 a year of KPEX, I would assume that borrowing probably will not rise at the same level, but, and I'll separately work on that with Conchal.

Perfect. Thank you.

Yeah, thank you.

Thank you. Ladies and gentlemen, we will take that as a last question and we conclude the question and answer session. I now have the conference over to Mr. Kunjal Mehta for his closing comments.

I would just like to thank each one of you who participated in the call. In case we have not been able to answer or verify to anyone, happy to take any of your queries separately. Thank you.

Thank you. On behalf of Azani Energy Solutions, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.