India’s Power Sector Sees Collaboration Between Corporate Giants

About the PPA

Adani Power Limited (APL) has recently achieved a significant milestone in the power sector as its subsidiary Mahan Energen Limited (MEL) secured a substantial long-term Power Purchase Agreement (PPA) with Reliance Industries Limited (RIL).

MEL, a wholly-owned subsidiary of APL has entered into a 20-year PPA with RIL for 500 MW of power under the Captive User policy outlined in the Electricity Rules, 2005. This agreement designates one unit of MEL’s Mahan thermal power plant with a capacity of 600 MW as the Captive Unit for this purpose out of its total operating and upcoming capacity of 2800 MW.

To comply with the policy requirements RIL will acquire a 26% ownership stake in the Captive Unit by investing in 5,00,00,000 equity shares of MEL at Rs 10 each totaling Rs 50 crore. This strategic investment enables RIL to qualify as a captive user of 500 MW generation capacity in line with the Electricity Rules, 2005.

MEL, a company engaged in power generation and supply was incorporated on October 19, 2005. Its turnover as per audited standalone financial statements for the financial years 2022-23, 2021-22, and 2020-21 stood at Rs 2,730.68 crore, Rs 1,393.59 crore, and Rs 692.03 crore, respectively.

In addition, APL announced today an enhancement in its credit rating to AA-, following the merger of six special purpose entities into its framework. This consolidation allows the company to amalgamate all separate loans of these entities into a single long-term loan amounting to Rs 19,700 crore, supported by eight lenders. This restructuring provides APL with consistent terms, greater financial flexibility, and reduced interest rates.

Stock Performance

In the latest trading session, the company’s stock closed at Rs 516.55. Opening at Rs 521.95 today, the stock is currently trading at Rs 521.95, reflecting a 1.05% increase. The company’s 52-week high is Rs 589.30, while its 52-week low is Rs 166.25. APL currently boasts a market capitalization of approximately Rs 2,01,200 crore. Over the past six months, shares have delivered a return of 38.92%, while the BSE Utilities index saw changes of 95.10% during the same period.

About Adani Power

Adani Power Limited is a part of the diversified Adani Group and is the largest private thermal power producer in India. The company, along 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.

Disclaimer: This blog is intended solely for educational purposes. The securities mentioned are for illustrative purposes only and not recommendations. The content is sourced from various secondary sources on the internet and is subject to change. Please consult with a financial expert before making any related decisions.