The brokerage believes that India is witnessing strong power demand growth, with peak demand reaching 270GW, and expects both base and peak power demand to grow at 6% annually over the next couple of years. Firm capacity addition has been low over the past five years; thus, to meet peak demand, India must rely on thermal capacity. Adani, as the largest private player, is likely to lead this thermal expansion.
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ICICI Securities Report
Following Adani Power Ltd.'s inline Q2 results, ICICI Securities has maintained its Add rating with a revised target price of Rs 210 from Rs 233.
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The brokerage believes that India is witnessing strong power demand growth, with peak demand reaching 270GW, and expects both base and peak power demand to grow at 6% annually over the next couple of years.
Firm capacity addition has been low over the past five years; thus, to meet peak demand, India must rely on thermal capacity.
Adani, as the largest private player, is likely to lead this thermal expansion. Adani has an 18.3GW of operational portfolio and ~23GW of UC portfolio, which is largely de-risked with BTG orders placed for all the capacity.
Moreover, it has signed PPAs for 62% of capacity at attractive rates – de-risking its portfolio.
The brokerage has fine-tuned its earnings estimates for FY27 and FY28, factoring in increased realisation offset by an increase in coal cost, depreciation, interest expense and expect Mahan Phase-II's commissioning in Q2FY28 (vs earlier Q1 FY28).
Risks: Delays in construction of assets; merchant price risks; fuel risks; and counterparty risks.
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