Nava Ltd Q2 FY27 Earnings Call: PAT Doubles on Record Revenue, 100 MW Zambia Solar Commissioned

Record Quarter, But Margin Compression

• Revenue from operations hit a record Rs.1,252 crore — up nearly 30% YoY in Q2 FY 2026-2027; consolidated PAT came in at Rs.403 crore, more than doubling versus the corresponding quarter last year.
• Operating margin declined from 43% in Q1 FY 2026-2027 to 38% — CFO B. Srinivas Rao attributed the decline to forex losses on capital advances.
• Other income of Rs.83 crore — the CFO attributed about Rs.45 crore to fair market value gains at the Singapore company level on two restructured downstream subsidiaries, a provision that will keep fluctuating; the remainder is interest and other income.
• H1 FY 2026-2027 net profit of ~Rs.700 crore (cited by an analyst) — management declined to comment on the analyst's suggestion of FY 2026-2027 PAT closing at Rs.1,400-1,500 crore or FY28 PAT of Rs.2,200-2,300 crore.
• Zambian kwacha depreciated ~8% QoQ — the CFO flagged this as a positive, with DTL coming down on account of the depreciation; mining PAT was nonetheless flat YoY vs Q2 FY 2025-2026 on kwacha-driven forex losses and higher fuel costs.

Solar Commissioned, Phase 2 on Track, Merchant Tailwind

• 100 MW Zambia solar project commissioned end of September 2026 (Q2 FY 2026-2027) — 88 MW was live on the grid as of the call date, with the full 100 MW expected to be flowing through the grid by end of November 2026 (Q3 FY 2026-2027).
• Emergency tariff of 9 cents — effective from September 2026 (Q2 FY 2026-2027), applicable for the first year of operations; management declined to give specific EBITDA guidance for the solar plant.
• 300 MW Phase 2 expansion at MEL targeted for commissioning in July 2027 (FY 2027-2028) — management guided that EBITDA will be similar to phase one (period unspecified); Phase 2 is supposed to conclude by July 2027 (FY 2027-2028).
• Management expects plants to ramp to 80%+ PLF within about 2-3 months of commissioning — versus the 6-12 month ramp to 60-70%+ optimum PLF the analyst asked about.
• India plants ran at a PLF of 82% or higher in Q2 FY 2026-2027 — silicomanganese production resumed at the Odisha operations.
• IEX rates up ~40% YoY in FY 2026-2027 — management cited a strong rebound in India's power sector and is "fairly confident" the favorable merchant trend for the 150 MW NVL capacity will continue, though no specific utilization or realization figures were given; most available surplus has been tied up via bilateral contracts running up to May (year not specified).

Exploration Progress Across Lithium, Manganese, Agri

• Mining revenue grew in Q2 FY 2026-2027 on higher sales quantity — but PAT was flat YoY vs Q2 FY 2025-2026 due to kwacha-depreciation forex losses and higher fuel costs, per the CFO.
• Zambia lithium land hurdle resolved — MD & CEO Ashwin Devineni said drilling will now be undertaken and is expected to take close to a year, after which reserves will be assessed before any call on mining production (period unspecified).
• Côte d'Ivoire manganese exploration completed in a 2 sq km area with encouraging results — exploration of remaining areas continues; the company is in the process of converting the asset from exploration to exploitation, with no timeline given.
• Zambia avocado operations preparing for first commercial harvest and sales — the integrated sugar complex at Cawamba is progressing on cultivation, equipment deliveries and infrastructure, with targeted commissioning in March 2028 (FY 2027-2028).

Large Cash, Rising Debt, and the Negative-Carry Debate

• Cash & cash equivalents of ~Rs.2,000 crore as of March 2026 (FY 2025-2026 close) and >Rs.2,000 crore as of September 2026 — the CEO clarified this represents lender drawdowns for the Jandia Phase 2 project, held in USD current accounts due to dollar scarcity in African countries, yielding ~4.5% interest (FY 2026-2027).
• Negative carry flagged by the analyst — earning 4.5% on deposits versus paying a minimum ~10% on borrowings (analyst's estimate, FY 2026-2027); the CEO responded that drawdowns are already staggered rather than drawn at one shot.
• Long-term borrowings of almost Rs.3,000 crore as of Q2 FY 2026-2027 — management said additional debt will be taken only at the project level, once projects under evaluation are conceptualized; no debt-reduction schedule was committed for FY 2027-2028 to FY 2028-2029.
• Peak debt of 450 million (period unspecified) — structured with a 3-year moratorium and 7-year repayment; management indicated peak debt could be around 300-350 million over the next 4 years (FY 2027-2028 to FY 2030-2031) as projects are commissioned and repayments commence in parallel.
• Kambaba integrated sugar project estimated to cost around $200 million (period unspecified) — financed at a 50:50 debt-to-equity ratio, with equity from Nava's side and debt sourced at the project level.
• US $10.5 million recovered from Zefco as of the call date (FY 2026-2027) — bringing the remaining receivables balance down to US $2.6 million.

Nacharam Land Held, Phase 1 Shutdown Planned

• Nacharam land monetization on hold — a real estate firm engaged to assess the Nacharam land and other Andhra Pradesh holdings advised the board to hold rather than monetize, based on current market dynamics; the CEO acknowledged an analyst-flagged government land-conversion fee of Rs.300 crore (period unspecified) but said the hold recommendation stands, citing the fast pace of development.
• Phase 1 shutdown planned for FY 2027-2028 — coinciding with Phase 2 start; management declined to commit to total shutdown months but indicated shutdowns will begin approximately in May (FY 2027-2028), with each unit's shutdown taking about 3 months.
• Dambya Phase 2 tax holiday "currently being pursued" — no confirmation or approval yet.
• Annual tariff escalation under the USPP applied in Q2 FY 2026-2027 — effective from the start of September; management confirmed it recurs every year and has applied since commissioning, not a one-time increase.
• M&A under evaluation — management is currently evaluating inorganic opportunities and will share details once projects are presented to the board; no timeline committed (period unspecified).

Management Declines Guidance Despite Record Quarter

• CEO Ashwin Devineni declined to provide or raise full-year FY27 revenue and PAT guidance — despite the analyst citing a record Q2 FY 2026-2027, stating he would "not get into the revenues."
• Dividend policy clarified at ~25% of standalone PAT — the CEO corrected the analyst's assumption of 30%; on a buyback or higher dividend in the next couple of months (FY 2026-2027), the board will deliberate and act "when the time is right" — no timeline or quantum committed (period unspecified).
• Valuation disconnect raised by an investor — Arun Kumar Javar cited cash profit of about Rs.2,000 crore (period unspecified) versus a market capitalization of only Rs.16,000 crore (as of the Q2 FY 2026-2027 call) and suggested publishing investor presentations; the CEO responded that the company is "extremely strong financially," that management does not control the stock price, and that the investor department engages investors and funds on a continuous basis.
• Renewable pipeline being evaluated — a couple of renewable projects (Zambia or elsewhere) are currently being considered, but management declined further detail until they take shape; no commitment made.
• H2 FY 2026-2027 priorities — sustaining operational performance, progressing ongoing projects, maintaining financial discipline, and building a diversified portfolio capable of delivering long-term value.