New Delhi, Feb 4
Global brokerage firm Jefferies has started coverage on Adani Power Limited (APL) with a buy rating and a target price of ₹660, predicting a 30% upside from current levels.
Strong Growth Plans
Adani Power is India’s second-largest thermal power producer after NTPC and plans to increase capacity by 1.7 times, from 17.6 GW to 30.7 GW by 2030. The company has secured land and financing, while collaboration with BHEL for equipment delivery and in-house EPC work ensures capital expenditure stays on track.
“Thermal capacity in a peak deficit scenario, along with merchant exposure, is a positive. We initiate coverage with a buy rating and see a 30% potential upside,” Jefferies stated.
Operations and Fuel Management
Adani Power operates 12 power plants across eight states, with 87% of its capacity secured under long-term Power Purchase Agreements (PPA). About 98% of its open capacity is near coal mines, making fuel sourcing more economical. Meanwhile, its coastal plants (43% capacity) depend on imported coal, but cost pass-through mechanisms protect against price fluctuations.
Jefferies projects Adani Power’s merchant capacity to be 12-13% by FY30, contributing 19-20% of EBITDA, down from 30% currently. They estimate ₹6/unit merchant realisations for APL, compared to ₹7/unit in FY24. A 5% increase in merchant prices could boost EBITDA by 2% in FY27.
The brokerage believes power demand should recover to 7% levels, similar to the FY03-09 Capex cycle, which could drive stock performance.
Financial Performance
Jefferies estimates Adani Power’s EBITDA to grow 10% CAGR from FY24-27 and 19% CAGR from FY27-30 as new capacity comes online.
On Tuesday, APL shares were trading at ₹504.
For Q3 FY25, Adani Power reported a 7.4% rise in net profit to ₹2,940 crore, up from ₹2,738 crore in Q3 FY24. EBITDA grew 23% to ₹6,185 crore, supported by one-time income. Total revenue increased by 11% to ₹14,833 crore, driven by higher volumes.
