Adani Green Energy Gets 'Outperform' From Macquarie As It Sees 200% Upside In Bull Case
With a solid renewable energy expansion plan, Adani Green Energy is well-positioned to lead India's energy transition, said the brokerage.
Macquarie Equity Research initiated an Outperform rating for Adani Green Energy Ltd. with a scenario-weighted target price of Rs 1,200, and a bull-case target price of Rs 2,600 if the company successfully meets its targets. The bull case implies a 200% upside from the current level.
The company's strong growth potential, robust cash flow generation, and ability to manage debt make it a compelling investment. With a solid renewable energy expansion plan, Adani Green Energy is well-positioned to lead India's energy transition, said the brokerage.
The rating comes on the back of the company's plan to expand its capacity from 12GW currently to 50GW by financial year 2030. This ambitious growth plan aligns with India’s broader goal to triple its renewable energy capacity to 500GW by financial year 2030.
Macquarie in its base case assumes a more conservative target of 30GW. This involves steady improvements in utilisation rates driven by technological advancements, particularly the Khavda super-site, and an increasing share of higher-tariff merchant capacities. As a result, Adani Green Energy is expected to deliver a 25% CAGR in Ebitda over the next five years, according to the brokerage.
The green energy company is expected to generate $1.8 billion in annual operating cash flow, noted the brokerage in its report on Wednesday.
In a bull-case scenario, Adani Green Energy achieves its target of 50GW, resulting in a 40% CAGR in revenue and Ebitda. This would push the stock price to Rs 2,600 per share, contingent on the successful execution of its growth strategy, the brokerage added.
AGEL faces several risks, including high leverage, funding and refinancing challenges, regulatory risks, and potential delays in infrastructure development. These factors could impact the company’s ability to execute its growth plans smoothly.
Macquarie’s target price of Rs 1,200 is based on a 17.5x financial year 2027E EV/Ebitda valuation.
Key catalysts include a faster-than-expected capacity ramp-up and the successful execution of growth targets, particularly achieving the 50GW capacity by financial year 2030.
