Adani Energy's profit doubles, but tax gain matters

Adani Energy Solutions Limited (ADANIENSOL) reported Q2 FY27 profit after tax of ₹1,364 crore, compared with ₹557 crore a year earlier. Total income rose 51% to ₹10,239 crore. The headline profit growth looks impressive. But investors need to understand what drove it. Reuters reported that a deferred tax gain contributed to the increase in profit. That matters because a tax benefit can lift reported earnings without representing an equivalent improvement in recurring operating performance. The operating numbers, however, are encouraging. Operational revenue increased 51% to ₹7,167 crore, while operating EBITDA rose 68% to ₹3,070 crore. The smart metering business also continued to expand, with 14.8 million meters installed cumulatively by the end of September. The company has an implementation pipeline of 24.6 million smart meters, with stated revenue potential of ₹29,519 crore. Its transmission projects under construction are worth approximately ₹87,000 crore. These are meaningful opportunities, but an order book is not the same as cash received. Execution timelines, project costs and working-capital requirements will determine how much value reaches shareholders. My view: I am more interested in the growth of operating EBITDA than the 145% increase in reported profit. The operating performance appears strong, but the tax benefit makes the headline earnings comparison less useful on its own. The next things I would track are operating cash flow, debt levels, smart meter execution and the contribution from new transmission projects. My stance: The operating momentum is positive, but I would assess sustainable earnings without relying on one-off tax benefits.