India’s Baseload Push Puts Adani Power In Sweet Spot, Says Antique Initiating Buy — Check Target Price

Adani Power Ltd. is entering a sustained, multi-year earnings upcycle as India’s power demand structurally rises and baseload requirements tighten, believes brokerage firm Antique Broking.

Once a stressed thermal power producer, the company has repositioned itself as the most efficient private-sector baseload power producer, backed by scale, cost leadership and long-term visibility, said the brokerage's latest report, as the firm initiated a 'buy' call on the company with a target price of Rs 187, indicating a potential upside of 30% on the counter.

India’s power consumption is being reshaped by electric vehicles, data centres, AI and manufacturing, creating steady demand that renewables alone cannot meet. This has revived the strategic importance of coal-based baseload capacity, an area where Adani Power is emerging as the clear private-sector leader, says the report.

The company is executing the largest thermal expansion by a private player, largely through brownfield projects that keep costs low and timelines tight. This approach, along with captive coal linkages, strengthens dispatch competitiveness and supports merchant and contracted capacity alike, as per the brokerage.

Antique highlights Adani Power’s dominance in state-led thermal PPA awards, where it has secured the bulk of recent contracts. A significant share of both operational and upcoming capacity is already tied up under long-term PPAs, offering strong earnings visibility. New contracts also carry higher fixed charges, improving cash-flow stability even if plant utilisation moderates.

The balance sheet turnaround is another key pillar of the story. Regulatory resolutions and the successful revival of distressed assets have normalised tariffs, unlocked receivables and structurally lowered capital employed per unit of capacity. This has set the stage for expansion without stretching leverage, aided by strong internal cash generation.

With a largely de-risked execution pipeline, assured fuel supply and improving return metrics, Antique believes Adani Power is well placed to compound earnings steadily through the cycle.

Adani Power’s journey over the past five years marks one of the sharpest turnarounds in India’s power sector, believes the brokerage. What was once a stressed thermal portfolio weighed down by disputes, weak cash flows and heavy leverage has been systematically stabilised through regulatory relief, operational tightening and a sharply opportunistic inorganic strategy. The result is a company that has moved from prolonged losses to predictable cash generation, creating the financial headroom to pursue growth at attractive economics.

The inflection point came from long-pending legal and regulatory resolutions. A series of favourable Supreme Court and appellate tribunal rulings validated compensatory tariffs and change-in-law claims, unlocking overdue receivables and restoring tariff pass-through mechanisms. These outcomes not only normalised cash flows but also reset the framework for future PPAs, materially reducing fuel-related volatility in earnings, as per the note.

Key projects that were once sources of uncertainty have now stabilised. Mundra’s landmark ruling embedded imported coal cost escalations into billing, while long-running disputes at Tiroda and Kawai were resolved in Adani Power’s favour, clearing receivables and restoring economic viability. Even the Bangladesh-linked Godda plant has seen receivables normalise to monthly billing. Together, Antique sees these resolutions transforming Adani Power from a litigant-heavy IPP into a contracted baseload operator with far greater earnings clarity.

Profitability is expected to remain resilient even as the company scales up. Margins may soften briefly due to renewable-led daytime displacement, but recovery is anticipated as fixed-cost recovery improves under newer PPAs. Over the medium term, Antique sees higher contracted capacity and operating leverage supporting margin expansion, even as depreciation and interest weigh on near-term bottom-line growth.

Execution discipline remains critical given the scale of projects under construction, says the brokerage. Fuel-supply volatility, regulatory delays and any residual exposure to merchant pricing could impact near-term performance. Cost overruns or timeline slippages in large brownfield and greenfield projects also remain key risks, though mitigated by Adani Power’s in-house execution capabilities and secured land and equipment orders.