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, strengthens the thermal portfolio, and supports long-term value creation and disciplined growth.

• Fully contracted asset with a 25-year PPA and strong operational track record, including availability above 90% and high merit order ranking.

• Aligns with a strategy of reliable, sustainable, and profitable growth, enhancing regional presence and diversifying geographic risk.

• Proximity to cement plants enables monetization of fly ash through long-term contracts, creating a secondary revenue stream.

• Brownfield expansion potential exists, with infrastructure available to add 800 MW for future supply.

Financial terms and conditions

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

• Securities Purchase Agreement executed on 16th February 2026 for a 1,400 MW plant; transaction based on a lock box date of 31 March 2025, with customary closing adjustments.

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

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

• Funding mix primarily debt, with some equity; average borrowing cost around 8-8.5%.

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.

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

• Operational excellence demonstrated by plant availability above 90% and low auxiliary consumption, supporting robust performance and strong EBITDA margins.

• Conservative projections assume higher O&M and SHR degradation, and lower fly ash income, providing room for future upside.

• Gains institutional expertise and technical capabilities from NPL.