Adani Power Gets Jefferies' 'Buy' Initiation On Multiple Growth Triggers, Capacity Expansion

Jefferies has initiated coverage on Adani Power Ltd., with a 'buy' rating, setting a target price of Rs 690 based on the optimistic outlook. The brokerage's positive stance is driven by its view that the company is poised for strong capacity addition on a comfortable balance sheet. Recent payments from Bangladesh also ease investor concerns.

This is coupled with a reducing risk profile as incremental capacity is secured through Power Purchase Agreements. Jefferies highlights Adani Power's efficient project management and close coordination with Bharat Heavy Electricals Ltd., for equipment delivery ensures that capital expenditure remains on schedule.

A significant point of focus in Jefferies' analysis is Adani Power's ambitious target to double its Ebitda by financial year 2030. The company aims to increase its generation capacity from 23 GW in FY23-25 to 30 GW by FY30E, with 11.2 GW of new capacity already ordered at competitive rates.

Faster execution, supported by dedicated teams and efficient equipment delivery, will enable over 3 GW to be operational by the first half of financial year 2028, signalling a double-digit Ebitda growth in financial year 2025 to 2030, Jefferies said.

The report also addresses the issue of payments from Bangladesh, which has been a source of investor concern. Jefferies notes that Bangladesh's $384 million payment in June 2025 is a confidence booster, representing 9% of the company's capacity. While the 2024 political upheaval in Bangladesh led to payment delays, outstanding receivables from Bangladesh were trimmed to $500 million after the June payment.

The company's average receivable days for financial year 2025 were 83, including Bangladesh, and 55 days excluding Bangladesh. This implies that Bangladesh had delayed payments by over six months, but the improved payment flow is expected to have a positive impact, according to the brokerage.

Adani Power is limiting its risk profile through more PPAs, Jefferies said. Management has indicated that earnings volatility should reduce as merchant capacity drops closer to 10-12% in the next five years from 18% in financial year 2025.

This shift towards more PPA-backed capacity will lead to a decrease in net debt-to-Ebitda ratio, which is expected to reduce from 0.7 times to 0.6 times by financial year 2030, driven by increased operational cash flow generation, the brokerage said.

Jefferies views Adani Power as a pure play on India's thermal energy story, offering faster growth compared to NTPC. With India's thermal targets likely to be raised, the company is well-positioned to capitalise on the opportunity.

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