Adani Power's profit jumps 142%, but tax distorts it

Adani Power Limited (ADANIPOWER) reported Q2 FY27 profit after tax of ₹7,019 crore, up 141.5% year on year. Revenue from operations increased 29.8% to ₹17,014 crore. But the headline profit growth needs context. Profit before tax from continuing operations rose 32.5% to ₹4,370 crore. That is strong growth, but it is nowhere near the 142% jump in reported net profit. Two factors help explain the difference. First, the company recognised ₹2,422 crore in prior period revenue, primarily following revisions to historical energy charges under certain power purchase agreements. The comparable amount a year earlier was ₹669 crore. Second, the company recorded a tax credit of ₹231 crore, compared with a tax charge of ₹1,060 crore in Q2 FY26. Both affected the reported earnings comparison. The operating backdrop is genuinely positive. India's electricity demand increased 11.5% year on year during the quarter, while Adani Power's continuing EBITDA rose 18.5% to ₹6,321 crore. My view: The business is benefiting from stronger power demand, but investors should not extrapolate 142% profit growth into future quarters. The more useful indicators are continuing EBITDA, power sale volumes and cash generation. The next trigger is the Q3 FY27 result. I would watch whether operating earnings sustain their growth after the prior-period revenue recognition and tax benefit are stripped out. My stance: The operating trend is encouraging, but the headline profit growth overstates the improvement in recurring performance.