Sarda Energy: How Its Energy Business Is Becoming the Key Earnings Driver

Synopsis: Record operational execution and a rapidly expanding energy business are reshaping the investment narrative for this Chhattisgarh-based company. With FY26 PAT rising 58 percent to Rs.1,109 crore, energy now contributing two-thirds of EBITDA, and coal mining capacity targeted to nearly quadruple by FY30, its long-term transformation is becoming increasingly visible.

What was once a mid-sized, cyclical metals business is steadily becoming a diversified energy and mining platform with stronger earnings visibility and lower commodity dependence. While steel and ferro alloys continue to anchor operations, the bigger story lies in its aggressive pivot toward thermal and hydro power, captive coal mining, and an integrated value chain that is beginning to reshape how the market thinks about this company’s long-term earnings potential.

With a market capitalization of Rs.18,444 crore, shares of Sarda Energy & Minerals Ltd. were trading at Rs.525 per share as of May 25, 2026. It’s trading at a market capitalization of  approximately 17x.

Q4 and FY26 Financial Performance

On a consolidated basis, total income rose 23 percent to Rs.5,928 crore from Rs.4,815 crore in FY25. EBITDA grew 44 percent to Rs.2,025 crore, with margins holding steady at 29.3 percent. Profit after tax climbed 58 percent to Rs.1,109 crore from Rs.702 crore in FY25, with PAT margin expanding to 18.7 percent from 14.6 percent. Basic EPS rose to Rs.31.38 from Rs.19.86 in FY25. 

Revenue from operations for the quarter came in at Rs.1,254 crore, broadly flat year-on-year against Rs.1,239 crore. EBITDA rose 11 percent to Rs.352 crore, with margins expanding to 28 percent from 24.7 percent. Profit after tax surged 53 percent to Rs.155 crore from Rs.101 crore in Q4 FY25, with PAT margin improving to 12.3 percent from 7.9 percent. Both Q3 and Q4 FY26 were impacted by a planned maintenance shutdown of one 300 MW turbine at the thermal power plant, which moderated top-line performance without derailing the margin trajectory.

Where The Real Transformation Is Happening

The real story is no longer just about higher revenues or profits but about how the business itself is changing. A few years ago, the company was largely dependent on the ups and downs of the steel and ferro-alloy cycle. Today, energy has become the core earnings engine, contributing nearly two-thirds of consolidated EBITDA in FY26.

Thermal power generation touched a record 5,458 million units during the year, while hydro generation also hit an all-time high of 661.37 million units, showing stronger utilization across assets. The SKS Power plant in Chhattisgarh, acquired through the IBC process, operated at a healthy 79 percent plant load factor in FY26 and continues to benefit from long-term PPAs  provide better earnings visibility. 

The biggest trigger came in February 2026, when the Supreme Court cleared all pending legal challenges around the acquisition. With that uncertainty now behind it, management is moving ahead with plans to double the plant’s capacity from 600 MW to 1,200 MW by FY30, strengthening its shift from a cyclical metals player to a much larger energy-focused business.

The FY30 Expansion Blueprint

Management is now entering a phase where the focus is clearly on scale. The company plans to increase total power capacity from 929.5 MW currently to 1,720.5 MW by FY30 through a mix of thermal, hydro, and solar additions. Alongside this, the mining business is also being expanded aggressively to support long-term fuel security. 

Coal production reached a record 17,99,998 metric tonnes in FY26 after the expansion approval at the Gare Palma IV/7 coal block, and management now aims to raise total coal mining capacity from 1.80 MTPA to 7.10 MTPA over the next few years through multiple projects and joint ventures.

Even as the company undertakes one of its largest expansion cycles, the balance sheet remains comfortable. The standalone entity is net debt-free, group liquidity stood at Rs. 2,380 crore, and operating cash flow nearly doubled to Rs. 1,735 crore in FY26. With CRISIL revising the outlook on its AA- rating to positive, the company appears financially well-positioned to fund its next phase of growth.

Technical Overview 

The stock’s Immediate support is placed near Rs. 538.75, while Rs. 640.05 remains the Closest resistance level. Price movement near these levels may determine the stock’s near-term trading range and overall market direction.

Verdict

Sarda Energy & Minerals’ FY26 results are not just about a strong year; they are proof that a multi-year structural transition is working. The energy division has moved from a supporting character to the primary earnings driver, the legal cloud over the SKS acquisition has lifted, and the mining pipeline is the largest it has ever been. For investors with an FY30 lens, the combination of record cash generation, a clean balance sheet, and a credible capacity roadmap is precisely where the long-term asymmetry lies.

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