Brokerage firm Emkay Global said on Monday that Adani Green Energy Ltd. (AGEL) has demonstrated impressive growth, with its operational renewable energy (RE) capacity expanding at a 41 percent compound annual growth rate (CAGR) over the previous five years.
The firm initiated coverage on the company with a ‘buy’ recommendation and a target price of Rs 2,550 per share, which represents a 50 percent upside from current levels.
The brokerage firm projects that the Adani Group company will see strong growth, underpinned by its strategic asset base and considerable potential in the renewable energy industry.
With over 50GW of well-secured solar-wind development sites in Gujarat and Rajasthan, Adani Green also has over 5GW of well-secured PSP (pump storage and evacuation) sites with evacuation visibility.
The paper stated that going forward, “the momentum would be concentrated in the Gujarat-Rajasthan supersites (Khavda, with 67 per cent of capacity with AGEL)”.
As to the brokerage, AGEL will see a 35% compound annual growth rate (CAGR) in revenue growth from FY24 to FY30 at the sites in Gujarat (Khavda) and Rajasthan, which are the most resource-rich locations worldwide.
The firm stated, “Leverage ratios should improve, with net debt-to-EBITDA falling to 3.6 times from 7.4 times, even though the balance sheet is likely to expand.”
With $3.4 billion in revolving construction facilities from banks and access to less expensive long-term global bond markets for the operational phase, AGEL has a diverse reservoir of cash.
“We anticipate a progressive decrease in AGEL’s cost of debt. According to Emkay worldwide analysts, “the entire partnership also provides funding with global best practices.”
AGEL is anticipated to achieve a compound annual growth rate (CAGR) of 31% to 56.5GW (including input solar for PSP) in operational RE capacity over FY24–30E. This is due to the development of the Khavda supersite, which is now at 2.3GW, up from 2GW at the end of FY24, and the expansion of other assets such as Rajasthan and PSP.
“The company aims to achieve this by FY29 itself. We build in an effective capacity CAGR of 34 per cent and while there could be phasing delays in the intermediate, FY30 looks largely realizable,” said the report.
Solar/wind CUF (capacity utilisation factor) should increase, from 24.5 per cent/29.4 per cent in FY24 to 30.3 per cent/34 per cent by FY30E, as the share of high-yield assets like Khavda and Rajasthan grows coupled with better module technology, it added.
