Adani Power In Focus As JM Financial Initiates Bullish Coverage On Strong Thermal Growth Opportunity

JM Financial sees Adani Power as a direct beneficiary of India’s long-term power demand growth, underpinned by the continued indispensability of thermal generation in ensuring grid reliability. The brokerage has initiated coverage on Adani Power with a Buy rating, valuing the stock at 13 times fiscal 2028 EV/Ebitda.

This translates into a target price of Rs 178 per share, implying around 20% upside from current levels and a valuation of approximately 3.4 times fiscal 2028 price-to-book.

With peak power demand projected to rise from about 250GW in fiscal 2024 to nearly 386GW by financial year 2032 and further to over 700GW by 2047, the brokerage believes thermal power will remain a critical base-load source, especially as the share of variable renewable energy such as solar and wind increases.

Adani Power was among the first companies to recognize the strategic importance of thermal power in India’s growth story in the post-Covid period, when peak demand accelerated sharply in fiscal 2022, financial year 2023 and financial year 2024.

Since then, the company has steadily built scale and is now India’s largest private sector thermal power producer, with an installed capacity of 18.1GW, comprising 10.8GW of organic capacity and 7.3GW added through acquisitions. JM Financial notes that the company is targeting a significant expansion to 41.9GW by fiscal 2032, positioning it as a central player in India’s evolving power landscape.

Execution capability remains a key differentiator for Adani Power. The company has created industry benchmarks, including the synchronisation of 4,620MW of capacity at Mundra within just 36 months. It has also been an early mover in pre-ordering critical power equipment, an approach that reduces execution risk and improves project timelines.

With key enablers such as land, environmental clearances, power purchase agreements and equipment already secured, along with strong in-house project management and logistics capabilities, JM Financial believes there is a high probability that Adani Power will achieve its targeted capacity of around 41.9GW by financial year 2032 or fiscal 2033.

Operational performance is another area where Adani Power stands out. The company currently operates with a plant load factor of around 71% and a plant availability factor of about 91%, reflecting strong asset utilization and reliability.

JM Financial expects operational capacity to reach approximately 41.3GW by fiscal 2032. Alongside capacity growth, profitability per unit is also expected to improve, with Ebitda per MW projected to rise from about Rs 1.3 crore in fiscal 2025 to around Rs 1.8 crore by financial year 2032, driven by scale benefits, better operating efficiencies and stable demand.

To fund its aggressive expansion, Adani Power is expected to undertake a substantial capex program of around Rs 2 trillion over financial year 2025–2032. As a result, net debt-to-Ebitda is likely to rise from the current low of about 1.6 times in financial year 2025 to around 3.0 times by fiscal 2029. However, JM Financial expects leverage to moderate again to around 1.6 times by fiscal 2031 as new capacities become operational and cash flows ramp up.

From a sectoral perspective, JM Financial estimates that India will require coal-fired generation capacity of roughly 340GW by 2047, necessitating significant additions over the next two decades to meet rising demand and replace retiring plants. In this environment, Adani Power’s scale, execution strength and early positioning are seen as key advantages.

On the financial front, JM Financial expects Adani Power to deliver a revenue CAGR of around 15% and an Ebitda CAGR of about 18% over financial 2025–2028, supported by capacity additions and improving margins.

Installed capacity is estimated to reach nearly 39.5GW by financial 2032 under the brokerage’s assumptions. Historically, the stock has traded at around 10 times trailing EV/Ebitda over the past five years, but JM Financial believes the improving Ebitda per MW and execution visibility warrant a valuation premium.