Reliance Power Limited (RPower), a key player in the Indian private power generation sector and part of the Reliance Group, has a diversified energy portfolio with coal, gas and hydro projects. The company operates about 6,000 MW of installed capacity and is expanding into international markets. This article provides a comprehensive financial statement analysis of Reliance Power using the income statement, balance sheet, cash flow statement, and key financial ratios, supported by the provided company data.
Table of Contents
- Reliance Power Company Profile: An Overview of India’s Private Power Giant
- Revenue Trends of Reliance Power: Key Insights from FY25 - FY26
- Reliance Power Balance Sheet Analysis: Assets, Borrowings, and Reserves
- Cash Flow Analysis of Reliance Power: Liquidity and Operational Strength
- Reliance Power Financial Ratios: Profitability, Liquidity, and Leverage
- Reliance Power Business Portfolio and Expansion Strategy
- Conclusion: Is Reliance Power Positioned for Sustainable Growth?
- Frequently Asked Questions (FAQs)
Reliance Power Limited is a part of the Reliance Group, India’s largest conglomerate. Within the energy sector, the Group operates through Reliance Power and Reliance Infrastructure. The company was incorporated on January 17, 1995 as Bawana Power Private Limited and later converted into a public company in July 2007, when its name was changed to Reliance Power Limited.
Reliance Power develops, constructs, and operates power projects in India and internationally. It has a large portfolio of power generation capacity, with around 6,000 MW of operational assets and more under development. The company has built a strong foundation reflected in its financial statements and asset portfolio.
The portfolio includes:
- 3,960 MW Sasan Ultra Mega Power Project (Madhya Pradesh) – part of the government’s 4,000 MW UMPP initiative.
- Coal-fired projects – supported by captive mines and imported fuel.
- Gas-fired projects.
- Hydroelectric projects – Several projects in Arunachal Pradesh, Himachal Pradesh and Uttarakhand.
The company has also registered projects under the Clean Development Mechanism (CDM) to earn Certified Emission Reduction (CER) certificates, reflecting its commitment to sustainability.
The income statement highlights how Reliance Power generates revenue, manages costs, and delivers profitability, offering insights into its financial strength and efficiency.
/content-assets/5116b58226b441db93762161693d9d1c.png)
Revenue from Operations
- The company reported revenue of ₹1,885.58 cr in Q1 FY26, which is lower than ₹1,992.23 cr in Q1 FY25.
- The decline of -5.35% suggests that demand conditions were weaker compared to last year. This could be due to softer volumes, reduced realisations, or competitive pressures in the market.
- The contraction in topline shows that while the company is improving operationally, it still faces headwinds in growing its sales base. Sustained revenue growth will be essential for scaling profits further.
Total Expenses
- Expenses reduced from ₹2,142.51 cr in Q1 FY25 to ₹1,953.01 cr in Q1 FY26, a savings of ₹189.5 cr.
- This 8.85% fall in expenses is larger than the 5.35% fall in revenue, which highlights the effectiveness of cost optimisation measures.
- The reduction may have come from lower raw material prices, efficiency gains, renegotiated supplier contracts, or tighter administrative control.
- This shows management’s ability to protect margins even when revenue growth is weak. Such structural cost improvements create a strong foundation for profitability once sales rebound.
Profit Before Tax (PBT)
- The company reported a PBT of ₹72.3 cr in Q1 FY26 against a loss of ₹73.33 cr in Q1 FY25, reflecting a turnaround of ₹145.63 cr (298%).
- This is a key milestone because it shows the company’s core operations are profitable again, even though revenue has not fully recovered.
- The turnaround was driven primarily by lower expenses, which more than offset the fall in revenue.
- Importantly, the positive PBT signals that the business is now in a position to benefit from operating leverage - meaning that as revenue grows, profits can scale faster since fixed costs are already optimised.
Net Profit After Tax (PAT)
- PAT turned positive at ₹44.79 cr in Q1 FY26 compared with a loss of ₹98.16 cr in Q1 FY25, an improvement of ₹142.95 cr (145.7%).
- This indicates that profitability improvements at the operating level were carried through even after accounting for tax and interest expenses.
- Positive PAT is a crucial indicator for investors as it reflects complete financial recovery, not just operational strength.
- The swing to profit also improves the company’s ability to fund growth internally and reduces reliance on external borrowing, strengthening the balance sheet.
Earnings Per Share (EPS)
- EPS improved from -₹0.24 in Q1 FY25 to ₹0.11 in Q1 FY26, reflecting a 35.3bps turnaround.
- This is particularly significant because EPS directly measures shareholder value creation. Moving from negative to positive EPS means shareholders are now seeing real returns per share.
Essence: The company is in a turnaround phase where cost efficiencies are driving profits. If revenues stabilise or grow in the next few quarters, profitability could improve at an even faster pace due to operating leverage. This combination of improving financial discipline and potential revenue recovery makes the company’s performance a critical inflexion point to watch.
To evaluate how the company’s Q1 FY26 profit rebound is reflected in the market, view the Reliance Power share price and latest performance charts.
The balance sheet provides a snapshot of Reliance Power’s financial position, highlighting its asset base, funding mix, and obligations. Analysing the structure of assets and liabilities helps assess stability, liquidity, and long-term sustainability.
/content-assets/ca682acea2fe4613955ce02dd660e857.png)
Borrowings
- In March 2023, borrowings stood at ₹21,236 crore, indicating the total debt Reliance Power had at that time.
- By March 2024, borrowings decreased to ₹18,766 crore, showing a reduction of ₹2,470 crore, which suggests the company was actively repaying debt or restructuring its liabilities.
- In March 2025, borrowings further declined to ₹15,153 crore, continuing the downward trend, which reflects improved financial discipline and a lower reliance on external debt.
Reserves
- Reserves were ₹7,860 crore in March 2023, representing accumulated profits or retained earnings.
- In March 2024, reserves slightly decreased to ₹7,597 crore, possibly due to lower profitability or higher dividend payouts.
- By March 2025, reserves increased significantly to ₹12,320 crore, indicating strong profitability, better cash retention, or capital infusion, which strengthens the company’s equity base.
Fixed Assets
- Fixed assets were ₹35,776 crore in March 2023, reflecting the company’s investment in long-term assets such as power plants, land, and machinery.
- In March 2024, fixed assets reduced to ₹33,584 crore, a decline of ₹2,192 crore, possibly due to asset depreciation, sale of old assets, or completion of some projects.
- In March 2025, fixed assets further decreased to ₹31,859 crore, showing continued depreciation or disposal of assets, indicating the company may be optimising its asset base.
Total Assets
- Total assets were ₹48,535 crore in March 2023.
- By March 2024, total assets declined to ₹43,758 crore, reflecting the combined effect of lower borrowings, a slight reduction in reserves, and a decrease in fixed assets.
- In March 2025, total assets further reduced to ₹41,283 crore, showing a continued trend of asset optimisation and debt repayment.
Overall, the total assets decline is mainly due to debt repayment and asset depreciation, reflecting a transition toward a leaner balance sheet.
The cash flow statement reveals how Reliance Power generates and utilises cash across operations, investing, and financing activities. It provides a clear picture of liquidity, operational efficiency, and financial flexibility.
/content-assets/d697f81f02dd4c8cb38920f325b65ac1.png)
Cash from Operating Activity (CFO)
- In Mar 2023, Reliance Power generated ₹4,024 crore from its core operations, indicating healthy cash inflows from its business activities.
- In Mar 2024, CFO declined to ₹3,174 crore, a decrease of ₹850 crore, signaling either higher operational expenses, lower collections from customers, or lower profitability translating into reduced cash generation.
- In Mar 2025, CFO further dropped sharply to ₹1,938 crore, showing a continuing contraction in operational cash flow by ₹1,236 crore from the previous year. This decline could reflect challenges in core power operations, such as delays in project execution or higher working capital requirements.
Cash from Investing Activity (CFI)
- In Mar 2023, the company had an outflow of ₹354 crore, suggesting that Reliance Power was investing in assets such as power projects, equipment, or strategic investments.
- In Mar 2024, outflow reduced to ₹192 crore, indicating slower or more controlled capital expenditures or divestment of some assets.
- By Mar 2025, there is an inflow of ₹451 crore, which could imply the company started liquidating investments, selling assets, or receiving returns from previous investments, helping improve liquidity.
Cash from Financing Activity (CFF)
- In Mar 2023, Reliance Power had an outflow of ₹3,623 crore, likely reflecting debt repayments, interest payments, or dividend distribution.
- In Mar 2024, outflow reduced to ₹2,734 crore, which could mean lower debt servicing requirements or lesser dividend payouts.
- In Mar 2025, outflow further decreased to ₹2,435 crore, indicating continued reduction in financing cash outflows, possibly due to lower interest or principal repayments.
Net Cash Flow
- Mar 2023: Net cash flow was slightly positive at ₹46 crore, meaning that despite large financing outflows, the company managed to generate enough cash from operations to cover some of its obligations.
- Mar 2024: Net cash flow increased to ₹248 crore, reflecting a combination of reduced financing outflows and controlled investing activity, allowing the company to build cash reserves.
- Mar 2025: Net cash flow turned negative at ₹46 crore, mainly due to a sharp decline in operating cash flows that could not fully offset financing outflows despite positive investing cash flow.
Overall, Reliance Power’s net cash flow is volatile, with positive cash in 2023–2024 but negative in 2025, signalling the importance of monitoring both operational efficiency and financing strategy.
Financial ratios drawn from Reliance Power financial statements provide deeper insight into performance, efficiency, and stability.
Financial ratios drawn from Reliance Power financial statements provide deeper insight into performance, efficiency, and stability.
Financial ratios drawn from Reliance Power financial statements provide deeper insight into performance, efficiency, and stability.
Financial ratios drawn from Reliance Power financial statements provide deeper insight into performance, efficiency, and stability.
Financial ratios derived from Reliance Power's financial statements offer a deeper insight into its performance, efficiency, and stability. By examining key metrics, we can assess profitability, liquidity, leverage, and operational effectiveness.
|
Ratio
|
Q1 FY26
|
Q1 FY25
|
|
Debt-to-Equity
|
0.43
|
0.31
|
|
Current Ratio
|
0.16
|
0.32
|
|
Net Profit Margin
|
8%
|
8%
|
|
Debt-to-Assets
|
0.36
|
0.78
|
Debt-to-Equity Ratio
- This ratio measures the proportion of debt relative to shareholders’ equity.
- In Q1 FY26, the ratio is 0.43, up from 0.31 in Q1 FY25.
- This indicates that the company has increased its reliance on debt compared to equity. Higher debt may increase financial risk but can also amplify returns if managed efficiently.
Current Ratio
- The current ratio indicates the company’s ability to pay short-term liabilities using short-term assets.
- A drop from 0.32 to 0.16 shows a decline in liquidity, suggesting that Reliance Power may face challenges in covering short-term obligations. A ratio below 1 is generally considered risky.
Net Profit Margin
- Net profit margin measures the profitability per unit of revenue.
- It remained steady at 8%, indicating consistent profitability despite changes in debt levels and liquidity.
- This shows the company’s ability to control costs and maintain earnings relative to revenue.
Debt-to-Assets Ratio
- The debt-to-assets ratio indicates the proportion of total assets financed through debt.
- A sharp decline from 0.78 to 0.36 means the company has reduced the reliance of its assets on debt significantly.
- This suggests improved financial stability and lower solvency risk, even though equity financing or asset reduction may have occurred.
Reliance Power has higher debt-to-equity but lower debt-to-assets, indicating better asset management despite more leverage. Liquidity is weak with a very low current ratio (0.16), though profitability remains stable. The company appears to prioritise long-term solvency over short-term liquidity.
CA Nikhil Nainani presents a detailed financial and technical analysis of Reliance Power in his YouTube video—worth watching to evaluate if the FY25–FY26 profit turnaround signals a sustainable comeback.
Reliance Power operates across multiple segments:
- Sasan UMPP (3,960 MW, Madhya Pradesh): Flagship coal project with captive mines. It forms the backbone of Reliance Power’s domestic generation capacity. The project ensures a stable supply of coal for uninterrupted operations.
- Rosa Power (1,200 MW, Uttar Pradesh): Coal-based thermal plant supplying base-load power. It contributes to the company’s domestic generation mix. Its operations are aligned with the current thermal power demand in the region.
- Hydroelectric: Several projects across the Himalayan states. These provide cleaner energy and diversify the generation mix. Hydropower adds to renewable energy capacity without relying on fossil fuels.
- Renewables: 100 MW Solar CSP, 40 MW Solar PV, 5 MW Wind. This reflects a shift toward sustainable energy. These projects contribute modestly to overall generation but align with India’s renewable energy goals.
- International: 3,000 MW gas-based project in Bangladesh. It expands the company’s footprint outside India. The project introduces gas-based generation capacity while diversifying geographic exposure.
/content-assets/0a79cb65ad774e84b7b45c349e77445d.png)
Wrap-up: The company is transitioning from coal-heavy assets towards renewables and international diversification. While coal remains dominant, renewable additions and overseas projects can provide long-term growth but involve execution and regulatory risks.
Curious how the company balances coal-based generation with a growing renewable footprint? The Reliance Power business model explains the revenue mix and strategic direction.
Overall, an analysis of Reliance Power’s financial statements shows the company is in a stabilisation phase — with profitability returning, debt coming down, and reserves improving, even as liquidity pressures remain.
Cash flows remain volatile, with operating cash dropping and liquidity under pressure, while financial ratios indicate stable profitability but weak short-term liquidity. Strategic diversification into renewables and international projects offers growth potential, though execution and regulatory risks persist.
Overall, the company is strengthening its financial position, but sustained growth will depend on higher revenues, improved cash flows, and better liquidity management.
Want to assess promoter confidence and institutional interest? Review the latest Reliance Power shareholding pattern for a detailed ownership breakdown.
Q1: Why did Reliance Power’s revenue decline despite operational improvements?
Revenue from operations fell by 5.35% YoY due to weaker demand, lower realisations, or competitive pressures. While operations became more efficient, topline growth remains a challenge, highlighting the need for market expansion or higher utilisation of capacity.
Q2: How did the company achieve profitability despite lower revenues?
Profitability improved mainly due to an 8.85% reduction in total expenses, driven by cost optimisation, efficiency gains, and better management of raw material and administrative costs. This demonstrates strong operational discipline.
Q3: What does the balance sheet indicate about Reliance Power’s financial health? Declining borrowings (₹21,236 cr → ₹15,153 cr) and rising reserves (₹7,860 cr → ₹12,320 cr) show reduced debt reliance and stronger equity. Total assets are decreasing due to depreciation and asset optimisation, reflecting a leaner, more stable financial structure.
Q4: Are there liquidity concerns for the company?
Yes. The current ratio dropped from 0.32 to 0.16, and net cash flow turned negative in FY25. While long-term solvency is improving, short-term liquidity is weak, signalling potential challenges in meeting immediate obligations.
Q5: How do financial ratios reflect the company’s risk and performance?
Net profit margin is stable at 8%, indicating consistent profitability. Debt-to-equity rose to 0.43, suggesting higher leverage, but debt-to-assets fell to 0.36, reflecting better asset management and lower solvency risk. Overall, the company balances leverage with asset stability.
Q6: What is the outlook for growth and expansion?
Reliance Power is diversifying into renewables (solar, wind) and international projects (Bangladesh gas-based capacity), which can drive long-term growth. However, these involve execution, regulatory, and market risks, making cash flow and project management critical.