Imported coal costs jump 50% for Adani Power; tariff recovery to take over 6 months

What happened

Adani Power's imported coal costs rose about 50% year-on-year in Q2 FY27, and it will wait more than six months to recover these higher costs through tariffs. Fuel cost increased to ₹10,229 crore from ₹7,216 crore.

Confirmed

Global impact / market context

Higher coal costs hit cash flow before bills catch up, so Adani Power funds the gap itself for months. That ties up cash and can raise borrowing needs, while competitors with faster tariff adjustments keep more stable profit per sale.

Analyst inference

The CEO said tariffs, including merchant rates, must rise somewhat. Higher power prices would pass part of the coal cost to buyers, potentially easing generator losses but adding cost pressure on industries and households that buy electricity.

Analyst inference

What to watch

1. Adani Power's first-half FY27 fuel expenses rose to ₹19,768 crore from ₹14,535 crore, so upcoming results will show whether imported coal costs stay elevated. Confirmed
2. Watch whether regulators approve higher tariffs for the Gujarat project, whose tariff is linked to fuel costs but lags the market by more than six months. Proposed
3. Track merchant power rates: if they rise as the CEO suggested, Adani Power may recover fuel costs faster on uncontracted sales and protect cash available. Analyst inference

Evidence

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