Contracted Baseload Growth Platform; FY28+ Ramp Drives the Story

Research evidence excerpt

Contracted Baseload Growth Platform; FY28+ Ramp Drives the Story

June 4, 2026

We update our FY27 and FY28 estimates to reflect APL’s shift in

operational priority toward contracted, availability-based earnings rather

than merchant-led volume growth. Our revised valuation applies an 18x

FY28E EV/EBITDA multiple. We believe the premium is justified by APL’s

faster capacity growth, higher execution intensity, and a greater visibility

into contracted EBITDA. (see pg 4 onwards).

Summary

The post-call discussion reinforced that FY27 should be viewed as a

transition year, with the larger earnings step-up beginning thereafter.

Management expects the first 660 MW unit at Korba Phase II to be

commissioned between June and September, with the second before year-

end. Korba is not yet tied to a long-term PPA. Mahan Phase II is expected in

late FY27/early FY28. Management attributed the modest timing buffer to

labor and broader geopolitical disruption, while noting the delay remains

within the scheduled commissioning framework.

The company’s merchant capacity position is now much smaller than

implied by FY26 merchant volumes. Management clarified that merchant

capacity was ~16% at the start of FY26 but has since declined to ~5%

today, or about 1 GW on an RTC (round-the-clock) basis. Remaining

merchant exposure is primarily at Mahan Stage I and Mundra Unit 9,

with a small amount at Raipur. Recall, FY26 merchant/short-term sales

of 20.9 BU reflected average open capacity over the year, not the go-

forward open-capacity base. This matters because APL is shifting toward a

more contracted and predictable earnings profile at a time when average

merchant realizations are being compressed by renewable additions and

improved fuel availability. While peak-period pricing dislocations should