Smart metering business will help Adani Energy Solutions (AESL) boost its earnings before interest, depreciation and amortisation (Ebitda) said rating agencies and analysts tracking the company. With smart meters, the company can monitor and predict power consumption pattern over micro geographies and hence manage retail distribution better.
AESL has a 17% market share in the segment with 23 million meters.
Rating firm Fitch expects that the Ebitda contribution from smart metering business to reach above 25% in FY26. It was nil in FY24 and 15% in FY25, considering the fast cash conversion cycle.
“Cash generation starts once 5% of contracted meter capacity or 25,000 meters whichever is earlier, has been installed,” Fitch said . Its cash flow is exposed to India’s weak state-owned power distribution entities, although direct debit facilities for consumer bill payments to distribution utilities facilitate the recovery of dues, it added.
AESL spokesperson did not respond to the mail on the subject stating the company is in a silent period ahead of its earnings. The government has set a target of 250 million smart meters by 2030. AESL’s experience in operating Mumbai discom has led it to emerge as a key player in this programme, securing an order book of 23 million till February 2025, Elara Capital said.
The installation of each meter needs an upfront capital investment of `5,800. During the 90-month agreement term, the company is likely to generate revenue of `12,000 per meter. The company is set to sustain an Ebitda margin of 85% in this vertical, Elara said.
Given that AESL is executing smart metering projects of about 23 million meters, that is around `27,200 crore (in value), about 4.5 million meters should be added by end FY25 and FY26 target is 10 million meters, of which 7 million is from existing contract and balance from new wins, Jefferies said.
Tata Power is also executing smart metres. Recently, Tata Power Delhi Distribution partnered with Probus Smart Things to boost smart metering technology through the adoption of a Universal Network Interface Card
(NIC) with Bluetooth-enabled communication.
Power distribution companies (discoms) could generate an additional revenue of Rs 4 lakh crore over the next seven years by installing smart meters across the country’, Care Edge Ratings said recently.
About 20 million smart meters have been installed in the country by January 2025. However Care Edge Ratings anticipated that smart meters installations will reach only25% of targeted 250 million meters by March 2026, falling short of the government’s target.
“The ambitious target of installing 250 million smart meters requires a significant investment of Rs 1.25 lakh crore with Rs 95,000 crore in debt and 25% equity contribution,” the rating firm said.
