🔍 Observations
Topline
- Core power supply revenue grew 22% YoY (₹9,495 Cr → ₹11,602 Cr), reflecting new capacity additions coming online.
- Equipment/goods sales fell 53% YoY (₹1,552 Cr → ₹724 Cr) as fewer EPC-type pass-through contracts were executed; total revenue still rose 11% (₹12,422 Cr → ₹13,819 Cr).
- Q4 FY26 was seasonally the strongest quarter (₹3,727 Cr vs ₹2,837 Cr in Q3), driven by higher solar irradiation and wind output.
Bottomline
- Consolidated PAT flat at ₹1,987 Cr vs ₹2,001 Cr — topline growth fully absorbed by rising finance costs (₹5,492 Cr → ₹6,484 Cr, +18%) and depreciation (₹2,498 Cr → ₹3,372 Cr, +35%).
- PAT attributable to equity holders grew 17% (₹1,495 Cr → ₹1,753 Cr at TCI level), with NCI share declining — a structurally positive shift for listed shareholders.
- EPS improved to ₹9.65 from ₹8.37 despite a marginally larger share count (1,647 Cr vs 1,584 Cr shares), signalling earnings accretion from equity raised.
Margins
- Operating profit before working capital (from cash flow): ₹10,912 Cr on total income of ₹13,819 Cr → implied operating cash margin ~79%, up from ~73% (₹9,046 Cr / ₹12,422 Cr) — reflecting high operating leverage of renewable assets.
- Finance costs consume ~47% of operating cash profit (₹6,484 Cr / ₹10,912 Cr), leaving thin residual for equity holders after debt service.
- Net profit margin: 14.4% (₹1,987 Cr / ₹13,819 Cr), roughly unchanged from 16.1% in FY25 — debt burden is the primary margin suppressor.
Growth Trajectory
- Power generation segment revenue grew 26% YoY (₹9,679 Cr → ₹12,227 Cr), outpacing total revenue growth — core business is accelerating as the equipment pass-through segment shrinks.
- Capex of ~₹26,097 Cr in FY26 vs ₹24,776 Cr in FY25 confirms unrelenting capacity build-out; PPE grew from ₹76,218 Cr → ₹97,070 Cr (+27%) and CWIP from ₹14,479 Cr → ₹19,016 Cr, signalling strong near-term visibility.
- Operating cash flows grew 13% (₹8,957 Cr → ₹10,135 Cr), tracking asset base expansion — a healthy sign that deployed capacity is generating proportionate cash.
🧮 Profit & Loss Statement
🧮 Balance Sheet
🧮 Cash Flows Statement
🟢 Green Flags
- 26% YoY growth in core power generation revenue — commissioned capacity is translating directly into contracted cashflows, validating the build-and-earn model.
- Operating cash flow of ₹10,135 Cr is entirely self-funded from operations, no operational cash burn even at this scale of investment.
- Deferred tax asset doubled (₹634 Cr → ₹1,109 Cr) — benefits from accelerated depreciation under the renewable tax regime are building a meaningful future cash tax shield.
- Equity attributable to parent grew 64% (₹12,137 Cr → ₹19,965 Cr), driven by ₹7,012 Cr warrant conversion — meaningfully strengthens the equity base and reduces leverage at the holding level.
- Q4 FY26 PAT at ₹514 Cr vs Q4 FY25 ₹383 Cr (+34%) — quarterly earnings momentum is rising, suggesting full-year FY27 will benefit from a high base of newly commissioned assets.
- CWIP of ₹19,016 Cr is a visible pipeline of earnings-generating assets — translates to future revenue without further land/resource risk.
- Equipment segment contributed ₹426 Cr PAT at reasonable margins — though shrinking in size, it remains profitable and supports group-level integration.
🔴 Red Flags
- Gross debt at ₹98,373 Cr (NC borrowings ₹87,897 Cr + current ₹10,476 Cr) vs equity of ₹29,879 Cr — debt-to-equity of ~3.3x; any refinancing stress or rate spike has outsized PAT impact.
- Finance costs at ₹6,484 Cr exceed PAT by 3.3x — the business is structurally dependent on debt rollover; earnings sensitivity to borrowing costs is extreme.
- Net cash position deteriorated: cash fell from ₹2,212 Cr → ₹1,735 Cr despite ₹10,135 Cr operating inflow and ₹7,012 Cr equity raise — capex and debt service are consuming all inflows.
- Exceptional items recurring: ₹219 Cr loss in FY26 vs ₹326 Cr in FY25 — structurally embedded losses (likely FX/derivative-related) are not one-off and depress reported profitability.
- Trade receivables rose 38% (₹1,540 Cr → ₹2,129 Cr) against 22% power revenue growth — collection cycle is stretching, likely due to state DISCOM counterparty delays.
- Other financial assets (current) surged: ₹481 Cr → ₹2,341 Cr — needs disclosure scrutiny; sharp moves in this line without explanation may indicate intercompany or derivative exposures.
- NCI declined in absolute terms (₹10,436 Cr → ₹9,914 Cr) even as the business grew — warrants monitoring for minority squeeze-out dynamics or returns accruing away from minority investors.
📊 Balance Sheet Analysis
- Asset quality is capex-heavy but productive: PPE + CWIP = ₹1,16,086 Cr (80% of total assets) — appropriate for an infrastructure business with long-duration contracted revenues, but illiquid by nature.
- Leverage is high but project-financed: most debt sits in SPV structures with matching long-term PPA cash flows — not corporate recourse in the traditional sense, though consolidated metrics look alarming in isolation.
- Equity base strengthened materially — Other Equity nearly doubled (₹9,129 Cr → ₹17,643 Cr) post warrant conversion; net worth is real, not inflated by revaluation reserves.
- Supplier’s credit jumped sharply (₹593 Cr → ₹2,105 Cr) — indicates extended payables to equipment vendors; useful for working capital but may signal tighter cash discipline or vendor dependency.
💰 Cash Flow Analysis
- Operating cash flow of ₹10,135 Cr (up 13% YoY) demonstrates the asset base is generating predictable, contracted cash — the core business works.
- Investing outflow of ₹26,227 Cr (vs ₹19,827 Cr) — free cash flow is deeply negative (approx. -₹16,092 Cr); the company is in sustained build-out mode with no near-term FCF inflection.
- Financing inflows of ₹15,615 Cr were net positive despite ₹7,434 Cr finance costs paid — reliance on perpetual debt rollovers and fresh borrowings to fund the capacity programme is structural and not self-funding yet.
- Net cash decline of ₹477 Cr despite record operating inflows and a large equity raise underscores the capital intensity; the company is effectively a funded pipeline story, not a cash-generative one yet.
💡 Investment Outlook
Adani Green Energy is executing a high-conviction capacity build-out with confirmed operational cash flow support, but the equity story remains a bet on the spread between contracted power tariffs and weighted average debt cost narrowing as assets mature.
The flat PAT trajectory masks genuine underlying progress — commissioned capacity is growing, NCI dilution is easing, and equity holders’ share of earnings is rising.
The critical watch points are DISCOM receivable stretch, refinancing risk on ₹98,000+ Cr gross debt, and the pace at which CWIP converts to revenue-generating PPE.
A margin inflection at the PAT level — the re-rating catalyst — will only materialise once capex intensity moderates and debt service coverage improves; that is a FY28-FY29 event at current trajectory.
Disclaimer: This post features ChartAlert-AI-generated financial content which may contain inaccuracies or errors. This commentary is strictly for informational purposes and does not constitute a recommendation to buy or sell any security. Investors are responsible for performing their own due diligence; always consult with a licensed financial advisor before making investment decisions.
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