Torrent Power · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
Merchant power profitability is directly tied to LNG costs. At $10/MMBtu, variable cost is Rs 6/kWh, making merchant sales viable only when market prices exceed this threshold. Any sustained increase in LNG prices could compress margins on merchant sales.
Wind PLF was impacted by heavy monsoon and extended rainy season in Gujarat, resulting in lower contribution of Rs 32 crore compared to expectations. Solar performance was relatively better.
Core-based power plant capital cost appears elevated compared to earlier expectations of Rs 11-13 crore/MW. Management indicated current cost of equipment has gone up and this is the budgeted cost as of now.
Rs 8,000 crore capex program with Rs 5,300 crore remaining for H2 FY26 creates execution risk. BTG (boiler, turbine, generator) awarded but balance of plant discussions ongoing. Any delays in commissioning could impact revenue recognition.
