Adani Energy Solutions' profit leaps on trading margins it expects to shrink

Adani Energy Solutions is best known for building and running high-voltage transmission lines, a regulated business whose income grows as new lines enter service. This year a younger arm that trades electricity is doing much of the lifting. The company's EBITDA, which it counts as operating profit plus other income, reached ₹6,726 crore in the first six months of the financial year, against ₹4,143 crore a year earlier. In April management guided to around ₹11,500 crore for the whole year, so the first half alone has delivered 58.5% of that figure, calculated from the filed results.

That comparison assumes the April figure was on the same basis, and it appears to be: the operating profit the company reported for the previous year matches operating profit plus other income in the filed results almost to the crore.

Much of the new money comes from Energy Solutions, a platform that buys power, much of it from renewable plants, and sells it to utilities, businesses and the power exchange. In the September 2026 quarter it earned more than ₹800 crore of EBITDA, over a fifth of the company's total for the quarter, calculated from the filed results. Roughly 3,500 million units of the power it handled were bought and resold on its own account, and on those units the chief executive, Kandarp Patel, put the margin at roughly ₹1.7 to ₹2 a unit.

Management does not expect that margin to last. Mr Patel said the company does not want its profit to swing with the market and is tying its supply into long-term contracts that he expects to earn ₹0.80 to ₹1 a unit. Asked whether the utility contracts would earn much less than the ₹0.80 to ₹1 a unit expected from business and data-centre customers, he said "it would not be much lower, but it will also not be this high because this is because of market conditions prevalent." The largest of them, a supply contract with Maharashtra's state distribution company, starts only in the last quarter of this financial year, and the head of the platform said about half of the power it needs has been sourced. Until then, the trading profit rests on market conditions that management treats as temporary.

That matters because the business meant to carry earnings once the trading windfall fades is transmission, and there the plan has shrunk. In April the company guided to about ₹15,500 crore of transmission spending this year; it now expects about ₹14,000 crore. It also put next year's transmission capitalisation, the value of assets that enter service and start earning tariffs, at ₹10,000 crore. In January it had trimmed the previous year's spending estimate too, mainly in transmission, because projects slipped by a month or two. Smart-meter installations, a smaller business, have been guided lower for this year as well.

The money is going in. The company said it deployed about ₹7,850 crore across its businesses in the first half. What has lagged is commissioning. An analyst observed that no meaningful transmission capacity was added in the first half, and the filed balance sheet agrees: net fixed assets were slightly lower at the end of September than at the end of March, while capital work in progress rose. Asked whether the earlier capitalisation guide, which the analyst put at around ₹15,000 crore, would be cut, Mr Patel said: "Not immediately because we are still hopeful that we will be able to complete what we plan in the current year." He expects right-of-way disputes in Gujarat to be resolved. Yet the three projects he named for the second half add up to close to ₹9,000 crore, so reaching the earlier figure would need commissioning beyond the projects he listed.

There are reasons for patience. Mr Patel said transmission spending has run a little slower in the first half of recent years, because of monsoon and summer weather and that every contract for the second half's work has been awarded. The trading margin could stay higher for longer if power markets stay tight, and the long-term rate he gave is in line with the ₹0.75 a unit or more he said in January that business customers would bring.