Sarda Energy & Minerals Limited (SARDAEN) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the SATA Energy and Minerals Ltd. Q3 and 9-month FY26 earnings conference call hosted by AdFactorsPR. As a reminder, all participant lines will be in the listenerly mode and there will be an opportunity for you to ask questions after the presentation concludes. If you need assistance, during the conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Mansi Bodas from Adpact SPR. Thank you, and over to you, ma'am.

Good evening, everyone, and thank you for joining us today to discuss Q3 and 91 FY26 business performance of SEMS. We have with us Mr. Pankat Sada, Managing Director, Mr. Manish Sada, Deputy Managing Director, Mr. Padram Kumar Jail, Director and Chief Financial Officer, and Mr. Nilay Joshi, Executive Director. Before we proceed with this call, I would like to mention that some of the statements made in this call may be forward-looking in nature and may involve risk and uncertainty. The company undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made. Documents related to the company's financial performance, including the investor presentation, have been uploaded on the stock exchange and company's website. I now hand over the conference call to Mr. Pankat Sahada. Thank you, and over to you, sir.

Thank you, Mansi. Good evening, everyone. For the nine-month period ended December 2025, the company has delivered a robust operating performance, reflecting steady execution across our integrated energy plus minerals platform. Our focus on scaling the energy business, strengthening integration across mining, and maintaining discipline in metals has continued to support stability and predictability across cycles. In line with this long-term strategy, the third quarter posted steady performance, barring certain planned and timing-related factors. The quarter was impacted by the annual maintenance shutdown of the IPP, the shutdown of one captive power unit for equipment replacement, and a period of subdued metal and energy prices. These were largely anticipated operational events, and our integrated model helped absorb the impact while maintaining stability across businesses. Operationally, production across key assets remained broadly stable. Thermal power generation at IPP and Ryger benefited from improved plant reliability and fuel availability, although plant maintenance affected output during the quarter. However, hydropower generation followed normal seasonal patterns. For the 9-month period, hydropower generation increased by 28% year-on-year to 621 million units, supported by above-average monsoon conditions and the commissioning of the 24.9-megawatt Reher Hydropower Project. For the Reher Project, we have signed a 40-year power purchase agreement with Chhattalgarh State Power Distribution Company Ltd. The tariff has been fixed at Rs 7.42 per unit, providing long-term revenue visibility and further strengthening the quality of our energy portfolio. The capacity of the Gare Palma 4x7 coal mine from 1.68 million tons to 1.8 million tons is at the final stage and is expected shortly. We remain confident of achieving the enhanced output within the current financial year. Development of the Shahpur West high-grade coal mine is progressing as scheduled, with commissioning targeted before the end of the next financial year. Approval processes for the Gare Palma 4x5, Bartunga, and Sindhuri coal mines are ongoing. Within our power portfolio, captive solar power, 50 megawatt, commissioning of the 50 megawatt captive solar power project is expected in the first quarter of the next financial year. Work is progressing on schedule. This is regarding 30-megawatt TG set replacement. Work is progressing on schedule with commissioning expected by mid-FY27. Shutdown in December temporarily affected steel production at Ripor. We are also pursuing approvals for expansion of our existing 600-megawatt IPP thermal power project. As an update on the ongoing litigation matters regarding SKS power acquisition, the appeals filed by the unsuccessful resolution applicants have been heard by the Honourable Supreme Court, and the matter has been reserved for order. Coming to the financial performance, consolidated revenue for Q3 FY26 stood at Rs. 1,360 crores, reflecting the impact of planned shutdowns and weaker price realizations. EBITDA increased to Rs. 395 crores compared to Rs. 368 crores year on year, driven largely by the energy segment. Consolidated PAT stood at Rs. 190 crores. For the 9-month period, PAT increased by 59% to Rs. 954 crores. Our balance sheet remains strong with negligible net gearing and net debt to EBITDA fell below 1x. Consolidated net debt as of 31st December 2025 was below Rs. 500 crores, significantly reduced from approximately Rs. 1,500 crores as of 31st March 2025. And liquidity remains robust. On a standalone level, the company remains cash positive. With that overview, I now hand over to Mr. Manish Sarda to discuss the industry overview and outlook. Over to you, Mr. Manish.

Thank you, Pankaj, and a good evening to everyone on the call. I will briefly touch upon the broader industry environment and the demand outlook across steel, power, and related commodities. During calendar year 2025, India stood out positively among global steel markets. Cruise steel production in India grew by over 10%, even as China and several global markets recorded contraction. While China's steel production fell to a six-year low, exports increased by 7.5% to around 119 million tons, continuing to influence global trade flows and pricing dynamics. India's steel consumption reached approximately 160 million tons, supported by sustained infrastructure spending and steady manufacturing activity. The imposition of safeguard duties has meaningfully altered trade dynamics, turning India back into a net exporter after six consecutive quarters of net imports. Steel prices, which had touched the multi-year lows earlier in the year, recovered sharply towards the end of December and have strengthened by around 10-15%, From a policy perspective, the union budget's allocation of Rs. 20,000 crore toward carbon capture, utilization, and storage is a significant development, expected to support the adoption of greener technologies across energy-intensive sectors such as steel and cement and reinforces a long-term policy commitment towards sustainability and green transition. Turning to the power sector, demand during the quarter was largely flat on a year-on-year basis. Thermal plant utilization, which had softened since April, showed signs of improvement towards December. Power prices on the exchange moderated with IEX average prices at around Rs.33 per unit compared to Rs.3.79 per unit last year.

I'll continue with that. There might be some line issue in the Manish Sardaji's line. Neelai, can you hear?

Yeah, yeah, are you audible?

Hello, am I audible? Yes, yes, I am audible. Coal index prices also declined modestly during the period contributing to a relatively benign fuel cost environment. Am I audible?

Yeah, yeah, I can hear you clearly.

Okay. Looking ahead, infrastructure spending, federalized export in Q3 went up from 23,256 metric tons to 33,272 metric tons year-on-year, registering a growth of 43% for a nine-month period. It remained near flat. Looking ahead, infrastructure spending policy continuity and the ongoing expansion of India's manufacturing bases are expected to support economic activity and steel demand. Recent firmness in commodity and ferrous metal prices points to improving fundamentals, while power prices have also shown signs of recovery since December. To add on the power side, we have secured 200 MW of medium-term and 100 MW of long-term offtake to our IPP, providing stability to cash flows. In addition, the signing of treated agreements with regions such as the EU, the US, and other markets is expected to support exports and enhance overall economic activity over the medium term. That concludes our overview of the industry, environment, and outlook. Thank you.

Yes, sir. Should we open the floor for Q&A?

Yes, please. Go ahead.

Okay. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Manav Gokia with Yes, Securities Limited. Please go ahead.

Yeah, hi. Good evening and thank you so much for the opportunity. Sir, first of all, I wanted to ask a bookkeeping question that was, could you give me what was the captives for, you know, the CPP production and sales units for this particular quarter? Yes, please. Pardon? The captive power plant that we have.

Now, you can refer to the investor presentation that has been uploaded on the website. You will find that data.

Yes, we have the IPP data over there, but not the CPP one. CPP, I mean, nothing very meaningful. On the production side as well, because there was a planned shutdown, I believe.

328 million units, and sales was 12 million units.

Okay. That is quite helpful. And for our IPP, what was the average tariff that we got for this particular quarter?

This tariff.

Yes.

That was somewhere in the range of 5 rupees.

5 rupees. And I mean, in the opening reports you mentioned, we are seeing some improvements. So how is Q1 shaping up, Q4 shaping up?

Q4 will be better than this level.

Okay, so 5.5.

It was slightly lower than 5 rupees, near 5 rupees, not 5 rupees. Now, it will be slightly above what we expect is above 5 rupees.

Okay, okay. That is quite helpful. So, secondly, I just wanted to know about, you know, the captive coal mine expansions that we are doing right now, moving from 1.8 to 3 million tons and then to 5.2. I think we had to apply for fresh EFEs, right? If I'm not wrong. And where are we in the process of that right now?

Right, we are in the process.

Okay, so what timelines are we looking at for the 3 million ton expansion?

No, it will take minimum 2 years, because forest clearance also is there.

Okay, so sort of 18 months to 24 months period for the final EC to arrive on the product. Minimum point. Got it, got it, yeah, thank you. So, one question I also had, you know, I think we have, we usually go for the Shakti coal, right, when it comes to our, so what would be the cost differential between the Shakti coal that we are using versus the captive coal from our Gare Palma mines?

So, it is almost equivalent, I would say. In fact, our captive coal prices might be $10 higher per GC.

But we can use our captive coal for other purposes, including commercial sales, because the market price of the coal for the usage other than the power plant are higher than the Shakti coal. So, we have auction to sell the captive coal in the market.

As well as, it totally depends on the auction also that is happening in Shakti Coal. So, sometimes we get it at cheaper prices. Sometimes the prices are higher.

Okay, okay. Sure, sir. So, one last question. Wanted to know, you know, what's the company's take on, you know, now doubling the capacities as SKS Power? How are those stocks shaping up?

So, we have already signed an MOU with the state government, and we should get the MOU in hand maybe in another one month, and then we'll start all the environmental analysis process, etc.

Okay, but it's going to be sort of a story for three, four years down the line, right? I think all the approvals might take another two and a half to three years. Would that be the right understanding? Correct.

Sure, sure, sure.

Yeah, that is quite helpful, and join back you, join the queue for more. Thank you so much.

Thank you. Ladies and gentlemen, if you wish to ask a question to the management, please press star and one. The next question comes from the line of Rajesh Bhandari with Nakora Engineers. Please go ahead.

Good afternoon, sir.

Good afternoon.

Sir, I had a question about the new PPA that you have told me about 200 MW and 100 MW. How many years are this?

2 PPA for 5 years and 1 PPA for 25 years. In the range of medium-term and long-term, it is in the range of, I think, 60-580.

Thank you.

Good morning, everyone, welcome to the call. That will create demand for the steel and power bolt. The second is the government's support for carbon capturing. If the technology will get the government's support, then it will also improve the efficiency of the steel plant.

Sir, carbon capturing is exactly what we are supposed to do. What will your money be and what will you get?

Thank you, ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Aman Goval, an individual investor. Please go ahead.

Good morning, everyone, and welcome to the call. Thank you.

So, considering this all, we assume coming two, three quarters also will be in the same line, or is there any improvement, you see?

No, as I have told you, in the past two months, the price increased 10-15% of the price increased. And here, the thermal price will also go up. The average we are considering that the annual price is 5 rupees. So, just like in the third quarter, the price is lower. The next quarter will be better. The first quarter will be much higher. Because in the thermal price, you get the maximum price for the power sales. Thank you. The industrial activity is improving. Power prices will also move up from here.

Okay, sir. Thank you, Dhaniawaj. This is from my side.

Thank you. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question comes from the line of Rajesh Verma with Pragya Securities. Please go ahead.

Good evening, sir. Sir, my question was, given that there is healthy cash generation in the company, are you looking for some more inorganic expansion opportunities or you will focus more on brownfield expansion only for now?

We are looking for both inorganic as well as the brownfield, brownfield only whatever we have planned, and there are certainly, both brownfield, we are taking up a few of the greenfield coal mines and greenfield hydropower projects. So, these are the greenfield opportunities, and addition to that, we are looking up for definitely the inorganic opportunities also.

All right, sir. Just a follow-up question on that. Given that there are so many tailwinds in sectors like nuclear energy, critical mineral mining, and battery storage, do you have plans to diversify in any of these sectors, sir?

We'll have a positive outlook towards these.

Sure, sir. Noted. All the best, sir. Thank you. That was my question.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Pooja Rathor, an industrial investor. Please go ahead.

Hi, sir. I want to check with you. If we are on track to achieve the 2,000 crore EBITDA in FY26, We

are in the cyclical industry, so generally we don't give advance guidance, but what we foresee, it should be better from 2026, higher than 2026.

Okay, sir, thank you for taking the question.

Thank you. A reminder to all participants that you may press star and 1 to ask a question. The next question comes from the line of Nupur Gandhi with Siddhi Technologies. Please go ahead.

Hello. Am I audible?

Yes, ma'am.

Sir, I wanted to ask you a couple of questions. First, being on the planned shutdown, so how long was it for, approximately?

So it was around 40 to 45 days.

Okay, both the plans?

No, no, no, no. The first one unit, that is 300 megawatt of our IPP unit was in a shutdown for 45 days for planned shutdown for a yearly overhauling, and another 30 megawatt plant turbine was taken on a shutdown on 1st December. This was Siltra Captive Power Unit, and it is being replaced with a new turbine, and we'll start the turbine by mid of June.

Mid of June?

Yes.

Okay. And, sir, any update on the Supreme Court hearing?

We already covered in our opening address. Hearing is closed and reserved for order. Thank you.

Participants who wish to ask a question may press star and 1. The next question comes from the line of Devang Sangvi with Abacus. Please go ahead.

Good evening, sir, and thank you for the opportunity. My first question is regarding SKS power plant. We had a guidance of 400,000 units of generation, and we are slightly lower in Q3. So, are we on track to that particular number for the whole year?

Yeah, yeah, we are on track.

We are on track. And any guidance for next year for SKS generation?

Generation should be slightly ahead from that level.

Slightly ahead from that level.

Yeah, it should be slightly ahead from that level.

420, 430, is that a good number to take?

Maybe 410, 420 in between somewhere it should be.

Right, sir. Secondly, we said that the steel paddies are starting moving up. So, wanted to know on a quarter on quarter basis, I think point to point we had said 10 to 15% height. So, what are the quarter 3 average and what could be the quarter 4 in terms of number, how high it should be?

The 4.3 average has been given in our presentation.

Right, sir.

And we can see the current price relations from there you can consider about 12 to 15 percent depending upon product to product.

Right, 12 to 15 percent could be the blended height from 53 levels.

Yeah, yeah, blended. Yeah, yeah. Ultimately, some variation there in the... Moving down, so giving specific percentage, but yes, it should be somewhere in the range of... Product to product, there are variations. Say in case of pellet, it may be 10%. In case of billets and wire rod, it is in the range of 15%.

Right, sir. Right, sir. Can you watch this case of payroll eyes in terms of pricing this quarter as compared to last quarter? Right, sir. And the KPIS guidance for this year and next year, how much do you spend in nine months? What is the Q4 we are going to spend? And what is the guidance for F27?

We have spent more than 400 crores already in the nine months, and what we had given the guidance of 500 to 600 crores, we should be able to comfortably achieve somewhere in the range of 550 to 600 crores approximately. Thank you, sir.

Thank you, sir. This is pretty helpful and all the best. Thank you.

Thank you. Participants who wish to ask a question may press star and 1. The next question comes from the line of Rajesh Verma with Pragya Securities. Please go ahead.

Good evening, sir. I just wanted to ask another question. When do you plan to, by the way, do you plan to double the escape plan's capacity?

So already, as in one of the questions I have answered, so we have recently done an MOU with the state government. So this MOU copy we'll get in a month or a two-month time. And then we'll start the process of environment clearances, which will take another two years. And immediately we'll then go for placing the orders.

Sure. Thank you so much. All right.

Thank you. Ladies and gentlemen, if you wish to ask a question to the management, please press star and one. The next question comes from the line of Pooja Rathor.

Thank you, sir. I just had a follow-up. You know, earlier energy was a big lever for your growth, and now you're saying that minerals is also going to add value. How will the segment composition and the revenue contribution change? Will power continue to be, you know, 60%, 60%, will it increase, will it reduce, and minerals will take over? How will it pan out?

Power will remain in the present category slightly. It may be adding more value because, ultimately, minerals will also get converted into the energy only. So, powers will remain prominent contributor to our bottom line.

Sir, you talked about how you move the ferro-alloy capacity to domestic right now versus export. Is that going to be the outlook for the rest of the year, and what's the differential in the realization, export versus domestic?

If I'm able to hear you correctly, the question that you asked is whether the domestic pricing or the export pricing was better.

Ferro-alloys, yes.

Yeah, in the federal laws, right? So on certain grades like the 70-grade silico-magnese that we produce, you know, we get a better realization. And on certain grades like 60-14, the domestic market is far better compared to the export markets. Primarily, the pricing remains almost the same. It's only the payment cycles which get impacted in terms of exports because in the export markets, you typically have around 21 days of payment cycles.

So is that going to be the trend that you'll continue focusing on domestic?

We will be continuously focusing on domestic as well as export markets because we have a very dedicated domestic market and we have a very dedicated export market. And, you know, we keep a tab on the pricing on a regular basis as to where we get our realizations, which are the best for the company. But there are also angles of what you call continuity of supplies because on certain contracts, this cannot be, you know, opportunistic. The export markets have to be continuously fed.

No, fair enough. Of course, there are some long-term relationships.

Yeah, some long-term relationships because it's very difficult, you know, to pinpoint a certain contract because there are certain contracts which you have to maintain for continuity as well.

Understood. Thank you so much.

Thank you.

Thank you. A reminder to all participants that you may press star and one to ask a question. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

Thank you to all the participants who have come on the call. To conclude, the quarter reflects steady execution against our strategic priorities, supported by a constructive pricing environment across both energy and metals. We have continued to make visible progress on our growth initiatives. Garepalma 4x7 mine is in the final stage of receiving the enhanced capacity approval of 1.8 million tons. Our solar power plant is expected to commission operations in the next quarter, and the Sahapur mine remains on the track for commissioning next year. In parallel, we continue to evaluate opportunities in the green power to further strengthen our future-ready portfolio. Our disciplined approach to deploying surplus cash into diversified long-term growth projects provides strong medium-term visibility and reinforces our commitment to sustainable value creation. Thank you for joining us today. Should you have any questions, please feel free to reach out to us or to our investor relations team. Thank you.

Thank you. On behalf of Sardar Energy and Minerals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.