Adani Energy Solutions Ltd

NSE:ADANIENSOL

Q4-2025 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '25 Earnings Update Call hosted by Adani Energy Solutions Limited. From the Adani Energy Solutions side, we have the following on the call: Mr. Kandarp Patel, CEO, Adani Energy Solutions Limited; Mr. Kunjal Mehta, CFO, Adani Energy Solutions Limited; Mr. Anupam Misra, Head, Group Corporate Finance; Mr. Vijil Jain, Head IR, Adani Energy Solutions Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Vijil Jain from AESL. Thank you, and over to you, Mr. Jain.

[Vijil Jain, executive]

Thank you, Michelle. Hi, everyone. Thank you for joining the call. Warm welcome to the quarter 4 earnings call. I hope you got a chance to go through the earnings material, which was uploaded on the website. And in terms of -- just to explain the flow of the call, so we will start with an opening statement from the CEO, Mr. Kandarp Patel, followed by Q&A and then, of course, the closing remarks.

So let me now hand over the call to K.P., sir. Over to you, sir.

[Kandarp Patel, executive]

Welcome, and good morning to all investors and analysts, friends. The last financial year FY '25 was a remarkable year for AESL, both in terms of future growth perspective and in terms of execution and operation during the financial year. So you all must have noted that we now have a strong order book of close to about INR 60,000 crores. Those projects will get executed in next 4 to 5 years.

We, in last year, won about seven projects in different geographies. But essentially, those projects are for evacuation of green power. And we will continue to have those kind of project development, which helps integration of more and more renewable power into the grid.

From operations side, you must have noted that in AESL level, we could double the CapEx as compared to previous year. We closed this financial year FY '25 with a total CapEx of INR 11,444 crores, which in previous year was about INR 5,600 crores. And going forward also, you will see this number growing. In FY '26, we expect to do a CapEx of close to INR 16,000 crores to INR 18,000 crores. And that will be aggregate CapEx of transmission, smart meter and distribution.

With all this performance, the EBITDA has grown at a healthy rate of 23%, beating our previous trend of about 11 to 12 percentage CAGR. And we aim to continue to this kind of a growth at least for another 4, 5 years.

From an operational update standpoint, our -- it remains close to 100, which is 99.7%. And that enabled also us to earn an incentive of about INR 132 crores. Now the total circuit kilometer has reached to close to 27,000 circuit kilometers. We commissioned MP-2 transmission project, which was a little complex one involving quite a large number of substation and small transmission line. We could also complete that difficult project.

We acquired last year Mahan Sipat project as well. On a distribution side, we sold about 6 percentage additional -- we could witness 6 percentage growth in energy sale of AEML Mumbai. And this is a very interesting one. In a geography like Mumbai also, we could grow at the rate of 6%. In Mundra, we sold 44 percentage additional electricity. That was because of additional demand that is coming from Mundra region. The remarkable thing as far as distribution is concerned in Mumbai, we could reduce T&D losses first time to less than 5 percentage. We closed this year at 4.7 percentage. Last year, it was 5.29 percentage. So the reduction of at least around 0.5 percentage which is significant on the base of 5.29 percentage.

The renewable penetration in Mumbai continues to be the highest in the country, and it was 36% in terms of energy for AEML in FY '25.

So all in all, in terms of financials as well as operation, AEML has done quite a good performance, both in terms of operation and financials and also in all the three segments.

The smart metering business, which started last year, we started with a slow pace, but by the end closing -- by the time we close the financial year, we could reach to 32 lakh meters. And now we are installing at the rate of about 27,000 meters a day, the average that we have done in the current month so far. And we expect to do at least 70 lakh meter installation in the current year, and that will take to about 1 crore aggregate meter by the year close.

Similarly, we also expect to commission seven transmission projects, aggregating project cost of about INR 15,000 crores during the financial year. One of the biggest in the seven projects will be Mumbai HVDC, which we aim to commission by December this year.

So with this pipeline and growth opportunity in all the three segments, we continue to grow at the pace that we have shown in the current year and keep this performance excellence intact and manage those transmission line abilities and distribution operations very, very efficient. You must have also noted that AEML has been ranked #1 utility distribution utility in the country consecutively for last 3 years.

So over to you. Now we'll take all those questions and additional information that you would want to have from us.

[Operator]

Sir, should we open the floor for the Q&A session?

[Kandarp Patel, executive]

Yes, please.

[Operator]

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

[Mohit Kumar, analyst]

Congrats on a very strong win in the fiscal year, especially on the transmission, right? So my first question is what is the CapEx which you have incurred or is incurred in FY '25 for the transmission, distribution and smart meters separately. If you can give us that number, it would be helpful.

[Kandarp Patel, executive]

Mohit, thank you so much. So the CapEx that we incurred in FY '25 was INR 11,444 crores, out of which in transmission, it was INR 7,646 crores. In distribution, it is INR 1,782 crores. And in smart metering, it was INR 2,015 crores.

[Mohit Kumar, analyst]

Sir my second question is on the opportunities on the transmission side, right? FY '25 was a great year. Do you see a similar pipeline in the next 12 to 18 months? Or do you think the pipeline has declined to a certain extent? Just on the transmission on the smart meter, similarly, if you can throw some -- I believe that Tamil Nadu has floated an order. Is that right? And are there any other opportunity on the smart meter?

[Kandarp Patel, executive]

Yes, Mohit, so transmission will remain -- the pipeline will continue to remain very healthy. INR 54,000 crores already under bidding at ISTS level. Now you must have seen that a state like Maharashtra, in fact, we discussed that in last call as well. Now all those transmission lines, which is coming up for execution of green power, ISTS line, all the states will also have to augment the transmission capacity to absorb the power in their area. So we feel that there will be a lot of opportunity now at a state level. Like Maharashtra itself has prepared a plan of about INR 150,000 crores in the next 6 years and many of the projects that they wanted to go through TBCB. So we believe that the pipeline will continue to remain healthy for at least a couple of years, and there is an absolute visibility about it.

As far as smart metering is concerned, there are three, four big states which they haven't yet finalized those smart metering contracts. One, obviously, among them is Tamil Nadu who has floated the tender. The balance one is part of MP, where they did in a few cities only. Rest of them is balance, entire state of Telangana, Karnataka and half of Tamil Nadu -- sorry, Andhra Pradesh. Andhra Pradesh also last time they invited a bid for limited number of meters. They haven't bid out all the meters.

So still about 10 crores to 11 crore meters that will come into a bidding. Time line is not sure, but they will certainly be coming out. And what we are focusing right now is to improve our installation rate, which we have reached to already 27,000 meters a day. And once we have that kind of a volume that we are in a position to install on the ground, and we will also then participate in all these bids and try and maintain our market share.

[Operator]

We'll take the next question from the line of Dhananjai Bagrodia from ASK Investment Managers.

[Dhananjai Bagrodia, analyst]

Congratulations on a good set of numbers. Just a couple of questions from my side. What is the CapEx we are looking at for FY '26 on a consolidated basis?

[Kandarp Patel, executive]

Yes. So we are looking at CapEx of about INR 16,000 crores to INR 18,000 crores on FY '26, and a breakup of that would be around INR 1,600 crores in AEML that we continue to do. About INR 4,000 crores would be -- minimum INR 4,000 crores would be in smart meter because we plan to do at least 70 lakh meters in this current year. And in transmission, we will be doing about INR 12,000 crores to INR 13,000 crores.

[Dhananjai Bagrodia, analyst]

Transmission, INR 12,000 crores to INR 13,000 crores. And sir, any update on the privatization of any of the distribution arms we thought we were looking at earlier when we mentioned for UP.

[Kandarp Patel, executive]

Yes. So, UP, the process is going on. In fact, they also had a meeting with all prospective bidders. And there -- all the senior officers, including Chief Secretary, were present, and they were very keen to take that process ahead. They already appointed a transaction adviser, Grant Thornton. And I think they should be coming out with a bidding document in a month's time. Government of UP seems to be committed and they wanted to do it as early as possible.

[Dhananjai Bagrodia, analyst]

And any idea what the -- this INR 16,000 to INR 18,000 won't include, and that would be open above anything which comes.

[Kandarp Patel, executive]

Sorry, come again?

[Dhananjai Bagrodia, analyst]

The INR 16,000 crores to INR 18,000 crores doesn't include the UP privatization. Anything for UP will be over.

[Kandarp Patel, executive]

No it is not. Anything relating to UP will be additional.

[Dhananjai Bagrodia, analyst]

Okay. Fine. And sir, lastly, just now we are hearing so much on the ground side that so much government's movement towards solar is increasing significantly. Are we seeing also more like in terms of bid pipeline will increase significantly going ahead? How are we seeing that for the next 2, 3 years?

[Kandarp Patel, executive]

So as I replied to Mohit, we see a very healthy pipeline, both at a CTU and ISTS level. And now we will see a lot of opportunities coming up at a state level in a state like Maharashtra Gujarat, Rajasthan, MP. In fact, MP recently came out with 3, 4 bids under TBCB. Maharashtra has also initiated that process. REC has already published that bid document and tender notice. So we will see a lot of traction from now state side as well besides the ISTS projects.

[Operator]

The next question is from the line of Dhruv Muchhal from HDFC AMC.

[Dhruv Muchhal, analyst]

Sir, the first question was on the metering business. So you have spent about INR 2,000 crores in the quarter in terms of CapEx, right, sir? This is for the quarter? No, this is for the year.

And sir, if I do this math of -- so what is the implied installations that should have happened at this CapEx run rate, that implies about INR 6,000 per meter is the CapEx cost. So is this in line with what you were expecting? Or is there some error in how I'm doing the math?

[Kunjal Mehta, executive]

So the CapEx amount is correct. So the number of meters, which were installed was close to around 31 lakh meters, plus there is a certain inventory also which is carried in the books. So roughly around INR 500-odd crores is also an inventory which is carried for the smart meters. So the per meter amount of the CapEx is roughly around [ INR 5,500 to INR 5,800 ]. If you do that math, then the number of [ INR 1,300 lakhs ] would match. Plus you have to add the inventory, which is also included in the CapEx amount.

[Kandarp Patel, executive]

And to answer your question, the number -- actual cost number is exactly in line with the expected number that we planned. So there is no change there.

[Dhruv Muchhal, analyst]

So sir, how do you account for this INR 900 that subsidy that we get from the government? Or is that not part of the estimates as of now?

[Kunjal Mehta, executive]

So INR 900 is an incentive which is given by the central government to the state DISCOMs and which the state DISCOMs gives as a part of lump sum advance over the -- as a part of the tariff itself. So it does not materially impact the capital cost. It just helps in sourcing of that funds whenever I have to fund it. But it is a part of the tariff itself.

[Kandarp Patel, executive]

How are you accounting for it?

[Dhruv Muchhal, analyst]

That does not come to you as a company. That comes to the state government or the state DISCOM?

[Kunjal Mehta, executive]

Yes, it comes to the state DISCOMs. And whenever we complete the installation, the state DISCOM then passes it on a onetime lump sum basis to us as part of the tariff itself.

[Dhruv Muchhal, analyst]

Okay. So that's already part of your bid price. So whatever INR 100 or INR 20 per month on the parts side.

[Kandarp Patel, executive]

Yes. Correct.

[Dhruv Muchhal, analyst]

So that will not be separately. Got it. Got it.

[Kandarp Patel, executive]

Yes, yes.

[Dhruv Muchhal, analyst]

And sir, second question is just on a broader outlook on the transmission business. So you have a very large order book now and the execution is also improving. But how do we see -- and the pipeline also seems very healthy as of now, as you mentioned, INR 54,000 crores plus probably some state bidding also can happen.

But how do you see -- given the balance sheet plus the existing order book, can there be a meaningful addition to the order book still? Or there could be a slowdown and focus more on execution now?

[Kandarp Patel, executive]

No. Obviously, we will add projects only if that fits within our financial metrics and also execution metrics. We will not be taking projects just because we wanted to build an order book. We will only add the projects looking at what are the kind of CapEx that we are delivering on the ground. Suppose in case it slows down than our expected rate, then we would probably not take the project.

[Dhruv Muchhal, analyst]

Got it. And sir, one interesting -- probably I'll take that later. But in terms of execution of transmission, when I look at the under construction projects, there have been some delays in terms of the time line. So some projects were expected to commission, I think, by March, have been delayed by a few months, probably only a few months. But just to understand what are the major challenges in terms of the time line because this probably leads to some revenue loss to us.

[Kandarp Patel, executive]

No. So the project that you are mentioning is delayed not because delay on our part, but because it is a part of a system. So you also need to be -- once those connecting elements are ready. So when you do a transmission project, obviously, at a certain point, you will have a dependency on somebody's component coming up. And -- but we are not affected because of that. There are two ways of mitigating it. We continue to monitor those elements on which we are dependent. So in that case, we will also regulate our pace accordingly. So we don't end up in that case, unnecessary IDC.

[Dhruv Muchhal, analyst]

Okay. And the revenue -- so if there is a delay on account to somebody else, you get a change in law or whatever...

[Kandarp Patel, executive]

Correct. Correct.

[Dhruv Muchhal, analyst]

Last period.

[Kandarp Patel, executive]

But the approach is that you don't get into regulatory issues if the issue is manageable otherwise. We will try and make sure that we have limited or bare minimum regulatory intervention that requires for us.

[Operator]

We'll take the next question from the line of Anuj Upadhyay from Investec.

[Anuj Upadhyay, analyst]

Congrats on a good set of numbers. So you mentioned about the commissioning of the transmission assets for FY '26, the major one being the Mumbai HVDC. What would be the other major assets? You mentioned, I guess, some six to seven projects which are likely to get commissioned for the current. Can you elaborate more on the projects which are likely to get commissioned?

[Kandarp Patel, executive]

Yes. So Anuj, another major one is Khavda Phase 2 Part-A, Khavda-1 pooling station, which is Extension 1, an RTM one. Then North Karanpura, the project which has been delayed for quite some time because of those environmental issues. We aim to complete this project in the current year. Then the WRSR project, then the Halwad project that is already under construction, and the Mumbai HVDC.

So all these projects, Khavda is about INR 1,300 crores. Khavda KPS-1 pooling station is about INR 900 crores and KTL North Karanpura is about INR 1,000 crores. WRSR is about INR 2,100 crores. Halwad is about INR 2,700 crores and HVDC about INR 7,000 crores.

[Anuj Upadhyay, analyst]

Halwad, you said, almost INR 2,400 crores.

[Kandarp Patel, executive]

INR 2,700 crores.

[Anuj Upadhyay, analyst]

Okay. And HVDC is INR 7,000 crores.

[Kandarp Patel, executive]

Yes.

[Anuj Upadhyay, analyst]

The overall order book of around INR 60,000 crores, which we have, how much of that could be converted into -- I mean, like what could be the revenue which we could determine or translate from the INR 60,000 crores of CapEx which we'll be doing over the next 4 to 5 years?

[Kandarp Patel, executive]

So that will be close to about INR 8,250-odd crores for those pipeline of INR 60,000 crore CapEx. That will translate to about 13.44 -- 13.77 percentage tariff to CapEx ratio, which you will see it's a very healthy one.

[Anuj Upadhyay, analyst]

Okay. Okay. And how much would be the incentive income, sir, for the full year from this transmission availability?

[Kandarp Patel, executive]

So currently, we do about INR 130 crores. All these projects once coming could be about close to INR 200 crores.

[Anuj Upadhyay, analyst]

This is for FY '26, you're saying, sir, or by the commissioning of this entire order book?

[Kunjal Mehta, executive]

INR 130 crores was for the current financial year, which we actually earned.

[Anuj Upadhyay, analyst]

'24, right. And INR 200 crores was?

[Kandarp Patel, executive]

INR 200 crores once all these projects are commissioned. So you can say for FY '26, '27, you will have an incentive of about INR 200 crores because these projects will get commissioned during the currency of the current year. So it will not be a full operation. Full operation will be in '27.

[Anuj Upadhyay, analyst]

Got it. Got it. And I missed out on the upcoming states who are probably planning to come out with a smart meter bidding and all. Last time, you had mentioned that around INR 10 crores is set to happen for states like AP, Telangana, Karnataka, Tamil Nadu and MP. Can you just give the status of -- I guess you mentioned, but I missed out on that.

[Kandarp Patel, executive]

So you're right. Although state remain to -- they will come out with the bidding process. One of them, Tamil Nadu has already come out.

[Anuj Upadhyay, analyst]

Okay. Okay. And lastly, sir, on the Fatehpur-Bhadla HVDC, have we started the awarding process with OEMs?

[Kandarp Patel, executive]

Yes. So we have already executed that contract with Hitachi and BHEL, and the work has already started on that project.

[Operator]

We'll take the next question from the line of Xinran Pan from Loomis, Sayles.

[Xinran Pan, analyst]

I want to ask for smart metering business. What is the current EBITDA? I mean, how should we expect when we talk about INR 1 crore number of metering, how much annual EBITDA would that contribute to?

[Kunjal Mehta, executive]

So in the current financial year, we installed close to 30 lakh meters, but the revenue was not that material, and therefore, it is not part of our segment reporting. From next year onwards, it would be a substantial number once we are able to achieve the 70 lakhs additional meters plus 30 lakhs-odd crore would get established next year. On the EBITDA estimate, around [ INR 1,350-odd crores ] per meter is the annual estimated EBITDA for smart metering business.

[Xinran Pan, analyst]

I'm sorry, for the EBITDA guidance, it's INR 13 crores to INR 15 crores per meter?

[Kunjal Mehta, executive]

INR 1,300 crores to INR 1,500-odd crores.

[Xinran Pan, analyst]

[ INR 1,500 to INR 1,500 ] per meter, that...

[Kunjal Mehta, executive]

Yes. Correct.

[Xinran Pan, analyst]

Okay. Can I also ask what is the -- on the AEML level, is there any dividend payout plan to QIA?

[Kunjal Mehta, executive]

So the dividend would be as per the covenants which are there under the bond documents, whereby whatever is the surplus, whichever is there, would be available for distribution to the shareholders, if at all, there is available surplus. Plus the company is more looking to delever its balance sheet, as you would have seen in the past 2 years or so. So a combination of either dividend or repayment of the existing loan, including the shareholder loan would be utilized from the available surplus at AEML level.

[Xinran Pan, analyst]

I see. Next question is on the refinancing. I think the PPT mentioned you expect to refinance the Adani Transmission '26 bond with a new amortizing bond. Would this be onshore or offshore? And then is there already some discussions, some progress you can share?

[Kunjal Mehta, executive]

Sure, it is sometime I mean -- yes, Anupam, go ahead.

[Anupam Misra, executive]

Yes. So this one, all the options are on the table. We will activate those options about 6 to 9 months prior to the actual refinancing.

[Xinran Pan, analyst]

Okay. Can I just ask what's the current funding situation onshore because your pipeline is actually quite substantial. How is the funding plan, the cost?

[Anupam Misra, executive]

Kunjal, do you want to take that?

[Kunjal Mehta, executive]

Yes, sure. So all the projects which are under construction, almost all of them are currently tied up in terms of the financial closures with the Indian banks and the Indian financial institutions. So under the Indian banks, all these projects which are under construction have already been tied up.

[Anupam Misra, executive]

And cost, Kunjal, if you can give an idea of the cost?

[Kunjal Mehta, executive]

Cost would be around 9.5% of these under construction projects.

[Anupam Misra, executive]

And the way they are structured is once these projects become operational, the rating improves and then the pricing drops below 9%.

[Kandarp Patel, executive]

That we have done recently for a few projects as well. Kunjal, you might like to give info about that part.

[Kunjal Mehta, executive]

Yes. So what happens is that post construction, our rating for transmission projects improved significantly. And if you would have seen, most of our projects are either AAA or AA domestically rated. And for AAA and AA+ ratings, we are able to achieve cost of around 8, 8.5 percentage from most Indian banks, Indian financial institutions and even the domestic capital markets.

[Xinran Pan, analyst]

Okay. Just one last question. I think before we mentioned some HVDC line ramp-up. Does that refer to the MT Package 2 that commissioned last year?

[Kunjal Mehta, executive]

Sorry, can you repeat your question?

[Unknown Analyst]

I was just checking some old notes and there was some HVDC line that referred to -- that we expect to ramp up. I just want to check on the progress of that.

[Kunjal Mehta, executive]

What we communicated is that the Mumbai HVDC line is going as per schedule, and we plan to commission that project during Q3 of this financial year.

[Operator]

The next question is from the line of Nikhil Nigania from Bernstein.

[Nikhil Nigania, analyst]

My first question is on the distribution side. Beyond Uttar Pradesh also, are you seeing any other opportunities possibly in early discussions for privatization of DISCOMs?

[Kandarp Patel, executive]

Yes, Nikhil, so currently, it is only Uttar Pradesh who has undertaken that process. But I believe if it goes through in Uttar Pradesh, it will set an example for a lot of other states as well. And then probably you might see a lot of distribution companies coming out with this kind of initiatives.

Uttar Pradesh one is also a fairly big one. They are planning to privatize two distribution companies out of their four distribution companies. They want to convert these two companies into five companies so that size is manageable. Those would be around 12,000 million unit volume company. And those five companies, they wanted to privatize.

[Nikhil Nigania, analyst]

Understood. So these five companies, I mean, if you could share some color, the plans to give it like one -- no one player can get more than one or there's no restrictions or it's too early to say...

[Kandarp Patel, executive]

Yes, it's too early to say because they haven't issued that RFP yet. So I think they will be issuing that RFP in maximum month time. A lot of discussion has happened with the prospective bidders, with the MoP and everyone. And I think they should be able to come out with that document very soon. So once we have that document, all those contours will be clear.

[Nikhil Nigania, analyst]

Okay. Understood that. So my second question then was on the transmission side. So when we speak to renewable companies, everyone highlights transmission as being a massive bottleneck for them. So given you are present in transmission, in distribution, and you spoke about intrastate transmission as well as a new opportunity. So I wanted to understand from a macro perspective on the grid, where do you see the biggest bottleneck, which is happening? Is it interstate? Is it intrastate? Or is it just execution of all the interstate projects, which is leading to such a situation?

[Kandarp Patel, executive]

No, it varies on a case-to-case basis. So sometimes you will find that ISTS line is ready and wherever it is getting connected in any state, from there, you have a bottleneck or sometimes state is ready and then you have a bottleneck in ISTS line.

There are interesting cases as well. Recently, some of the transmission ISTS line, which has to be completed for evacuation of Rajasthan renewable power, they got delayed, but project got commissioned and that energy started coming into Gujarat through existing ISTS line, and that created problem in Gujarat.

So it's a very dynamic one. It depends on a case-to-case basis. But what good thing has happened is having realized this problem now coordination between all the generators, transmission players and CEA, MoP and CTU is very, very good now. In fact, Secretary Power takes a review meeting at every interval of 1 month. And CEA also keeps on -- CEA and CTU also keeps on reviewing the situation regularly at the interval of 15 days. So whenever there is an issue, all these people get together and find a solution and push whatever that is required to be done.

[Nikhil Nigania, analyst]

Understood. And one last question then. I mean, you have built a very sizable order book for AE, Adani Energy, would capital become a constraint? I understand, I think what you mentioned to Dhruv earlier that you won't breach -- bid for anything less than your return threshold. But would capital become a constraint in bidding for new projects given the INR 60,000 crore work in hand that you already have for transmission?

[Kandarp Patel, executive]

I don't think that is going to be a problem. Anupam, would you like to...

[Anupam Misra, executive]

K.P., I'll take that. Yes, I'll take that. So see, the way this works, Nikhil, is that today, we've got about INR 1 billion of EBITDA. And that INR 1 billion of EBITDA will grow as and when more and more projects become operational, right? Our conversion ratio of EBITDA to FFO across our projects is about 50-odd percent. And what that means is that, that is the kind of cash flow available for us to reinvest. When we do these projects, transmission projects are a 3- to 4-year time line of construction. Some projects are 2 years, broadly 3 years on an average. So for that perspective, we will have a 3-year CapEx outlay. That's how the equity and the debt will go. And for smart meter, it is 1 year, but then within a year itself, we start generating cash flow, distribution is self-funding.

So if you put all of these three together, we still have a lot of capacity to build and put up more projects. So we will be an active player, but we will be very disciplined in terms of returns.

[Operator]

We'll take the next question from the line of Sumit Jain from ASK Investment Managers Limited.

[Sumit Jain, analyst]

I'm just keen to know what is the capitalized asset base in transmission business currently, which is, let's say, March '25?

[Kunjal Mehta, executive]

So, total all put together, we roughly have around INR 42,000 crores of asset base, of which distribution itself accounts for around INR 10,000-odd crores. So the balance entire amount is towards the transmission assets.

[Sumit Jain, analyst]

INR 32,000 crores roughly.

[Kunjal Mehta, executive]

Yes.

[Sumit Jain, analyst]

And of this INR 32,000 crores, how much would have got capitalized this year?

[Kunjal Mehta, executive]

Out of INR 11,000 crores that we incurred, almost entire got capitalized, except for the INR 600-odd crores of the smart meter inventory, which did not get capitalized and roughly around INR 1,000-odd crores, which is still under CWIP.

[Sumit Jain, analyst]

Okay. So roughly closer to about INR 10,000 crores, INR 9,500 crores got capitalized.

[Kunjal Mehta, executive]

INR 9,500 crores got capitalized.

[Sumit Jain, analyst]

In transmission business. So in that when I look at...

[Kunjal Mehta, executive]

All put together. We incurred INR 11,400 crores for all three businesses.

[Sumit Jain, analyst]

How much would be in transmission of this?

[Kunjal Mehta, executive]

INR 7,000 crores.

[Unknown Executive]

INR 7,646 crores.

[Kunjal Mehta, executive]

INR 7,646 crores to be precise.

[Sumit Jain, analyst]

So INR 25,000 crores to INR 32,000 crores is what we would have seen in terms of increase in capitalized base. Hello?

[Kunjal Mehta, executive]

Out of the amount INR 15,000 crores -- I mean, INR 12,000 crores that we are going to incur in the next year, around INR 9,000 crores to INR 10,000 crores would get capitalized. And the balance would be CWIP on a progressing basis.

[Sumit Jain, analyst]

Okay. So this is in FY '26. For FY '25, what you're saying is INR 11,000 crores got capitalized and of which INR 7,650 crores is in transmission. Is my understanding right?

[Kunjal Mehta, executive]

Correct. INR 11,400 crores was the total CapEx, of which INR 7,600 crores was in transmission assets.

[Sumit Jain, analyst]

So this is CapEx. And capitalized amount would be?

[Kunjal Mehta, executive]

The capitalization, I'll come back to you, but roughly around INR 1,000-odd crores would be in CWIP. So out of INR 7,500 crores, about INR 1,000-odd crores would be CWIP. So INR 6,000-odd crores would be capitalized amount.

[Sumit Jain, analyst]

Got it. So when I look at our operating EBITDA in transmission business, which is about INR 1,108 crores, that shows growth of just about 5% year-on-year. If our capitalization is INR 6,000-odd crores on a base of, let's say, INR 25,000 crores, that's about 25% -- I mean, thereabout in terms of growth, why has EBITDA increased only 5%?

[Kunjal Mehta, executive]

EBITDA increased from INR 3,800 crores to INR 4,400 crores, which is 19% on a full year basis.

[Sumit Jain, analyst]

I'm talking transmission business. Because capitalization can happen during course of the year. So, let's say, if one thinks about this quarter itself versus the last quarter, the entire 30 broadly thereabouts would be giving us EBITDA, right? So while EBITDA increase is only 5% in this quarter versus the base quarter last year?

[Kunjal Mehta, executive]

Correct. Operating EBITDA is 5%.

[Sumit Jain, analyst]

Yes. So logically, this should increase in line with growth in our capitalized asset base.

[Kunjal Mehta, executive]

Right. So in the entire year, the operating EBITDA has grown 19%, which is in line with the capitalization, which I just completed. And based on the -- I mean, based on the lines actually gets completed, the capitalization happens and the tariff starts getting built.

[Sumit Jain, analyst]

So what you're saying is the right picture to look at is not necessarily on a quarter basis, but full year number is what is the right number?

[Kunjal Mehta, executive]

Correct. Because there could be overlap. Like in this financial year, there are certain lines which actually gets -- billing would get started in the next financial year and so would have happened in the previous financial year.

[Sumit Jain, analyst]

Sure. Got it. And what is the difference between operating EBITDA and EBITDA? Why is EBITDA significantly higher than revenue itself in transmission?

[Kunjal Mehta, executive]

So the bridge between operating and EBITDA should be because of the EPC businesses, certain treasury income that we add and the trading income that is the trading from the power businesses that we add. So all put together, there could be a cap of around INR 500 crores, INR 600-odd crores each year.

[Operator]

The next question is from the line of Mohit Kumar from ICICI Securities.

[Mohit Kumar, analyst]

My first question is on the HVDC, which you won recently that Khavda -- at Khavda. What is the time line for execution? And is it being -- and what is the time line which you expect the financial closure to happen? I'm asking this question because this is slightly larger project, right, compared to...

[Kunjal Mehta, executive]

So the scheduled time line for the HVDC to get completed is around 48 months, and we are looking to complete the financial closure in the next 6 to 8 months.

[Kandarp Patel, executive]

So, Mohit, there are two pool, first pool, 48 months and second 54 months.

[Mohit Kumar, analyst]

Understood, sir. But I believe that we are facing some issues in general in procuring the HVDC terminals, so the government has allowed 54 and 60 months. Is that not correct? And have you signed the transmission service agreement?

[Kandarp Patel, executive]

We have signed the transmission service agreement, and we have also placed an order with the Hitachi matching that requires schedule under the TSA.

[Mohit Kumar, analyst]

So 48 to 54 months, right?

[Kandarp Patel, executive]

Yes, yes, yes.

[Mohit Kumar, analyst]

And sir, what is the status of bids for HVDC Khavda [indiscernible] scheme? Is it the bid has the technical bid submitted? And when do you expect the financial bids to open a rough number, a broad guideline?

[Kandarp Patel, executive]

So that bid submission has not happened. In fact, the final schedule for bidding should come anytime soon now. And that bidding process, we expect it to get completed in another next 3 months right up to the reverse bidding.

[Operator]

The next question is from the line of Ashwani Sharma from Emkay Global Financial Services.

[Ashwani Sharma, analyst]

Congratulations for a great set of performance. A couple of questions on the smart meter. So first one is that out of the 10 crores to 11 crores smart meter pipeline that you mentioned, what would be broadly our win target out of that?

[Kandarp Patel, executive]

So we wanted to maintain our market share, which is about 22%, 23%. So we'll target at least 2.2 to 2.3 additional crore meter.

[Ashwani Sharma, analyst]

And secondly, sir, again, on the implementation, so is there a supply chain issue that you envisage due to this U.S.-led tariff announcements? And in here also in the -- while implementation, is there a resistance from the residents as far as implementation is concerned?

[Kandarp Patel, executive]

So there has been a resistance not so great from residents, but those political interest -- western interest groups. But now things have sorted out in almost all geographies. Last year, when we started, we deployed smart meter at the average of about 2,000 meters in quarter 1, and when we closed the year in quarter 4, we had an average of about 18,000 meters a day. Currently, we are doing about 27,000 meters a day in the April.

So now in fact, all those issues relating to public resistance and those deployment on the ground, manpower, the training, the supply chain, now everything has been sorted and there are a lot of traction in terms of implementation from our side. So with this kind of a number, we are probably the highest in the country who is installing that number of meters in a daily basis.

[Ashwani Sharma, analyst]

Anything on U.S. tariff, sir?

[Kandarp Patel, executive]

So U.S. tariff doesn't impact us because we are a homegrown utility and no services of us is either getting exported or we are not dependent on any services or goods that comes from U.S. So there is no impact on us.

[Operator]

[Operator Instructions] The next question is from the line of Abhiram Iyer from Deutsche Bank.

[Abhiram Iyer, analyst]

Congratulations on a good set of numbers. Could you just give out what the debt numbers and cash numbers would be at the different entities, the transmission business, the Mumbai distribution business and the smart metering business? And if I could also may ask what would be the liquidity requirements at each of these entities over the next year, whether it's CapEx or any refinancing coming up? And could you -- if you can help us elaborate a bit on what the company's plans are for these?

[Kunjal Mehta, executive]

Sure. So as outlined, the plan for next year is close to around INR 15,000 crores to INR 18,000 crores of the CapEx in the next financial year, which comprises distribution of INR 1,600-odd crores, which is a self-funded asset, so you don't need CapEx for that. INR 4,000 crores of smart meters since it is also largely funded through internal accruals and working capital lines, immediately, that would be around roughly 50% that would be partially funded through debt and partially through internal accruals and short-term lines. And transmission of around INR 12,000 crores to INR 15,000 crores. Generally, we do a borrowing of 70% to 75% of the project cost.

Currently, we have around INR 8,500 crores of cash and cash equivalents and our net external debt is around INR 32,000-odd crores. which gives us a net debt-to-EBITDA of around close to 3.2x, which is at a comfortable position.

[Operator]

Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to Mr. Kunjal Mehta for closing comments. Thank you, and over to you, sir.

[Kunjal Mehta, executive]

I would like to thank all the investors and the participants who participated on the call. In case or in case you have any additional queries or clarifications, happy to take that post the call also. Thank you all for participating in the call.

[Operator]

Thank you very much, sir. Thank you, members of the management. On behalf of Adani Energy Solutions Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.