Torrent Power (TORNTPOWER) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of a 1.4 GW supercritical coal-based power plant in Punjab expands presence in northern India and strengthens the thermal portfolio, supporting long-term value creation and disciplined growth.

• Fully contracted under a 25-year PPA, the plant provides stable cash flows, grid stability, and supports peak demand in a high-growth market.

• Strong operational track record with availability above 90% and high efficiency, supporting immediate EPS accretion and robust performance.

• Proximity to cement plants enables monetization of fly ash, creating a secondary revenue stream.

• Brownfield expansion potential exists, with infrastructure available to add 800 MW at the same site.

Financial terms and conditions

• Enterprise value net of cash is INR 6,889 crore, including INR 3,661 crore for equity and convertible instruments, INR 495 crore for promoter loan repayment, and INR 2,733 crore of net debt as of March 31, 2025.

• Implied EV/EBITDA multiple is 5.97x, with per MW cost of INR 4.92 crore, below sector averages.

• Securities Purchase Agreement executed on 16th February 2026 for a 1,400 MW plant.

• NPL reported revenue of INR 4,866 crores and adjusted EBITDA of INR 1,153 crores in FY 2025.

• Transaction is based on a lock box date of March 31, 2025, with customary closing adjustments and expected to close by Q1 FY 2027, subject to regulatory approvals.

Synergies and expected cost savings

• Entire plant capacity is tied up through a two-part availability-based tariff, ensuring stable and visible distributable cash flows.

• Operational excellence with plant availability above 90% and low auxiliary consumption contribute to strong EBITDA margins.

• Asset expected to deliver mid-teen IRRs, with upside from expansion, lower O&M, and improved fly ash income.

• Leverages operational expertise and institutional capabilities to enhance scale and cash-flow stability.

• Conservative projections on O&M and fly ash income provide room for future outperformance.