According to powermin.gov, India’s Integrated Power Utilities sector plays a crucial role in the nation’s energy landscape, with an installed capacity of 425 GW as of October 2023. The sector is projected to meet a demand surge to 817 GW by 2030, driven by population growth and increasing electrification needs.
With a market capitalization of Rs 1.95 lakh crore, the shares of Adani Power Ltd were trading at Rs 506.35 per share, increasing around 0.81 percent as compared to the previous closing price of Rs 502.30 apiece.
Brokerage recommendations
Jefferies, one of the well-known brokerages globally, gave a ‘Buy’ call on the power stock with a target price of Rs 660 apiece, indicating a potential upside of 31 percent from a Monday price of Rs 502.8 per share.
Target Rational
Adani Power, India’s second-largest thermal power generation company after NTPC, plans to increase its capacity by 1.7x, from 17.6 GW to 30.7 GW by 2030, as per Jefferies. Operating 12 plants across eight states, 87% of its capacity is secured under Power Purchase Agreements (PPA).
Jefferies forecasts Adani Power’s merchant capacity to reach 12% to 13% by FY2030, contributing 19% to 20% of EBITDA. Additionally, every 5% increase in merchant realization is expected to boost Adani Power’s FY2027 performance by 2%.
Additionally, the brokerage anticipates incremental capex requirements of ₹1.6 lakh crore between FY2025-2030, with debt peaking at 1.4 times net-debt-to-EBITDA in FY2026-2027. Adani Power’s EBITDA is expected to grow at a CAGR of 10% from FY2024-2027, reaching 19% growth by FY2027-2030 as new capacity comes online.
Operational Performance
The company reported strong performance, achieving key growth milestones with 2,300 MW added, bringing operational capacity to 17,550 MW by September 2024. This includes 500 MW from Adani Dahanu, 600 MW from Lanco Amarkantak, and 1,200 MW from Coastal Energen. It also secured a 25-year power supply agreement for 1,496 MW in Chhattisgarh.
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Market Dynamics
The Indian power sector is growing rapidly, with peak power demand projected to reach 388 GW by FY ’32. The government’s target of 80 GW thermal power capacity by FY ’32 supports demand. High merchant tariffs and improved domestic coal availability position Adani Power for long-term and short-term growth.
Future Growth Strategy
The company’s future growth strategy targets 30+ GW capacity by FY30 with a debt-light approach, focusing on strong cash flow for capital expenditure. It has placed advance orders for 11.2 GW of capacity to be commissioned by FY30, including a 1,600 MW expansion at the Mahan Energen Site.
Company Profile
Adani Power Limited is a thermal power producer in India with a power generation capacity of approximately 12,450 megawatts (MW) comprising 12,410 MW of thermal power plants and a 40 MW solar power project. It focuses on providing power generation and coal trading.
Written by Abhishek Singh
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