Synopsis: Adani Power is India’s largest private power producer, but how exactly do they generate revenue out of it? We’ll be understanding through this article.
With India growing in sectors like infra, IT and more, its power consumption will also increase , this will benefit companies who are already into the power space and Adani, being one of the biggest thermal energy giants in india will benefit from this growth story.
Adani Power is a company that, with its subsidiaries, sells power generated from these projects under a combination of long-term Power Purchase Agreements, short-term PPAs and on a merchant basis. The details of how the company generates revenue out of this activity will be analyzed in this article.
With a market cap of Rs 290,138 crore, the shares of Adani Power have closed at Rs 149.6. The shares are trading at a PE of 23.7, whereas its median PE is 15.3. Its ROCE and ROE are 22.5% and 26.1%, respectively, and it has delivered more than 1,800% of return in the last 5 years
What does Adani Power do?
Adani Power Limited is India’s largest private base load power producer, operating 18,150 MW of coal-based capacity across multiple states. It also has a locked-in capacity of 23,720 MW, which adds up to a target capacity of 41,870 MW across 12 major plants located in states such as Gujarat, Maharashtra, Karnataka, Rajasthan, Chhattisgarh, Madhya Pradesh, Jharkhand, and Tamil Nadu, along with a solar facility in Gujarat. Its plants supply essential base-load electricity, which is the minimum amount of continuous power that has to be supplied by power generation companies, making it a key player in meeting the country’s round-the-clock power demand.
The company manages its entire coal supply chain in-house, right from sourcing fuel to transporting millions of tonnes each year and has a commercial mining operation with 14 MTPA capacity. This tight control over logistics helps Adani Power keep costs stable and ensures its plants never run short of fuel.
Adani Power is also known for taking over struggling power projects and bringing them back to life. By improving operations and stabilising output, the company has successfully turned several stressed assets into productive, revenue-generating plants. The company has turned around 3 projects, which are Mahan Energen Ltd, the Raipur plant and the Raigarh plant, with a capacity of 1,200 MW, 1,370 MW and 600 MW, respectively.
How do they generate revenue out of this?
Adani Power earns most of its revenue from long-term Power Purchase Agreements (PPAs) signed with state electricity distribution companies across India. Under these contracts, the company receives capacity charges for keeping its plants available and energy charges for every unit of electricity it supplies. Because most of its fuel costs are passed through to the buyers, these PPAs give Adani Power a steady, predictable stream of income.
Apart from PPAs, the company also generates revenue from merchant power sales, where a portion of its capacity is sold on power exchanges at market-driven prices. Adani Power additionally earns cross-border revenue by supplying electricity to Bangladesh through its Godda plant with 1,600 MW of capacity under a long-term agreement. Its integrated coal sourcing and logistics system further improves profitability by keeping operating costs low, adding to the company’s overall earnings strength.
The company stands out for its large, well-diversified portfolio of coal-based power plants, which gives it a strong presence across India and steady visibility of earnings. Nearly 84% of its capacity is backed by long-term PPAs, and about 57% of its fuel needs are secured through FSAs offering both revenue stability and protection against fuel price swings. Its financial position has also strengthened, with net debt levels improving sharply and liquidity buffers in place to support ongoing capex. Support from the wider Adani Group, especially in coal sourcing and logistics, further strengthens reliability and cost control.
However, the company still faces some vulnerabilities. About 16% of its capacity depends on merchant power markets, where demand and pricing can fluctuate significantly. It also deals with counterparty risks, as some state discoms and overseas customers have had a history of delayed payments, affecting cash flows. Additionally, while plant locations near pitheads help, the business remains exposed to regulatory changes, fuel availability issues, and transport bottlenecks of which can put pressure on margins during tough market conditions.
The revenue from operations for the company stands at Rs 13,457 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 13,339 crores, which is an increase of about 1 per cent YoY. However, the net profit stood at Rs 3,298 crore in Q2 FY25 versus Rs 2,906 crore profit in Q2 FY26, which is a fall of about 12%.
Written by Leon Mendonca.
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