The Quiet Giant Running On PPA Power

The Adani Power Story: From Merchant Survivor to PPA Juggernaut

Adani Power is India’s largest private thermal power producer. Not largest by installed capacity among private players — largest outright. 18.15 GW operational as of January 2026. That’s nearly 10% more than two years ago, all organic or acquired at bargain-basement prices.

The company runs a simple business: generate thermal power under long-term agreements (PPAs) with state electricity boards, private utilities, and Bangladesh. For anything not locked under PPA, sell into the merchant market at whatever price clears. Management has made a calculated strategic pivot: from 80% PPA / 20% merchant in FY24, to now 90% PPA / 10% merchant. This is deliberate de-risking.

Q3 FY26 results? Messy on the surface. Revenue down 8.9% YoY to ₹12,451 crore. Profit down 18.9% to ₹2,488 crore. But the underlying story is one of a company taking water out of its margins to lock in predictable cash flows, at a time when Indian power demand is real but uneven. Monsoons came early and heavy in Q3. Renewable energy ate into thermal demand. Merchant tariffs crashed from ₹6.16/unit (9M FY25) to ₹5.44/unit (9M FY26).

Yet the company remains unfazed. Because 90% of its revenue doesn’t care about day-ahead market prices. It comes from capacity charges in PPAs with fixed tariff bands. Management is betting that for the next 5–7 years, every rupee of capex they throw at building 24 GW of new capacity will land on a PPA. The odds? Improving daily. The risk? Execution.

The Unglamorous Reality of How India Gets Electricity

Adani Power operates thermal power plants across 8 Indian states: Gujarat, Maharashtra, Rajasthan, Chhattisgarh, Madhya Pradesh, Jharkhand, Karnataka, and Tamil Nadu. Plus one international asset: 1,600 MW Godda in Jharkhand supplying Bangladesh. Think of it as a network of furnaces, each burning coal and converting it into electrons sold under contract.

Revenue comes from two buckets. First, long-term PPAs with state electricity boards and industrial customers — covering 90% of capacity and running 15–25 years. These are two-part tariffs: a capacity charge paid monthly regardless of generation, and an energy charge for actual power delivered. The capacity charge is the crown jewel — it pays whether the plant runs or not. Second, merchant power sales into day-ahead and short-term markets for whatever capacity isn’t locked up — about 10% of the fleet.

Why two-part tariffs matter: When power demand drops (as it did in Q3 due to monsoons and renewables), the merchant price collapses. Adani’s merchant realization fell from ₹6.16/unit to ₹5.44/unit YoY. But that’s only ~10% of revenue. The 90% under PPA kept paying full capacity charges. That’s the entire business model in one sentence: get as much capacity as possible under fixed contract, and don’t get cute with merchant bets.

The company also owns four commercial captive coal mines it’s developing with an MDO to supply 14 MTPA domestically and reduce dependence on imports. Currently sourcing 30–35% of coal from imports; the plan is to gradually reduce that to zero by 2030–32.

Q3 FY26: The Confusing Numbers Explained

Result type: Quarterly Results (Q3 FY26)  |  Q3 EPS: ₹1.29  |  Annualised EPS (Q3×4): ₹5.16  |  Full-year FY25 EPS: ₹5.94

What’s This ₹2 Lakh Crore Capex Actually Worth?

The Big Capex Bet and Everything Else

Is the Fort Still Standing Against Rising Capex?

The Operating Cash Machine Buying Future Capacity

Numbers That Define a ₹2.68 Lakh Crore Company

Revenue Growing. Margins Stable. Profit Taking a Seasonal Hit.

Revenue scaling hard. Operating profit growing. But PAT volatile due to one-time regulatory settlements (₹4,240 cr Lohara claim in FY24, ₹1,348 cr Udupi LPS in FY24). Strip those out: core profit growth is 12–15% CAGR. The business is executing. Accounting creates volatility.

Adani Power vs The Rest of India’s Power Majors

Adani Power: largest by cap, best OPM, middle-of-the-road P/E vs peers. Tata Power is at 31.7x P/E despite weaker metrics — likely due to renewable upside narrative. Reliance Infra is dead money but at 0.8x P/E. The sector trades on growth narrative + PPA visibility + capex execution.

The Adani Group Owns 75%. What Happens Next?

The Boring But Critical Stuff (And The Not-So-Boring Stuff)

Thermal Power: The Unglamorous, Essential Bedrock of India’s Energy

India’s total installed capacity: ~460 GW (as of March 2025). Thermal contribution: ~52% (240 GW). Hydro: 13%. Renewable: 35%. Solar + Wind have stolen the headlines for five years. Markets worship renewable players. Everyone forgets: solar generates when the sun shines. Thermal generates when India demands it. Baseload power is boring. It’s also indispensable.

Adani Power operates 18.15 GW of thermal. That’s 7.5% of India’s entire thermal capacity. NSE ranks it the largest private player by far. NTPC (public) is larger overall. But NTPC’s fleet is older, dirtier, and saddled with legacy union issues. Adani’s fleet is modern, 74% supercritical or better, and operates at >90% availability.

The macro headwind: renewable energy contribution is rising. In Q3 FY26, renewables/hydro reached 24% of the grid mix (up from 21% last year). This compresses merchant tariffs and reduces plant utilization. Management quantified this: PLF declined to 62.6% in Q3 FY26 from 63.9% last year. But here’s the thing — PLF compression only hurts the 10% open capacity. The 90% under PPA keeps getting paid via capacity charges. This is the architecture of safety Adani built.

Macro tailwinds: India’s peak demand is growing 6–7% annually. Power demand is expected to hit 380–400 GW by FY32. That’s nearly 100 GW of NEW capacity required. Coal thermal will still cover ~55% of that (renewables take 35%, rest hydro/nuclear). Adani is adding 24 GW. NTPC is adding 30 GW. Other private players scattered. The math works. The question is execution and tariff realization.

The Capex Gamble