Adani Power has received a "Buy" initiation from IIFL Capital, with the brokerage assigning a 12-month target price of Rs 240 a share, saying the company is well placed to expand earnings through its growing power generation portfolio and project pipeline.
The brokerage said Adani Power's strategy of acquiring assets during industry downturns, combined with investments in new capacity, has helped build India's largest private thermal power generation platform. It expects the company to remain among the fastest-growing non-renewable power generators over the next few years.
The initiation underscores IIFL Capital's view that Adani Power's operating assets, execution track record and planned capacity additions could support sustained earnings growth. The brokerage estimates the company could quadruple EBITDA over FY33-FY35 as new projects become operational.
Capacity Expansion Supports Growth Outlook
IIFL Capital said Adani Power is developing 23.7 GW of additional coal-fired capacity, more than doubling its existing operating base of about 18 GW. More than half of the upcoming capacity has already secured long-term power purchase agreements, providing revenue visibility, according to the report.
The brokerage expects the company's free cash flow from operations to increase as new projects are commissioned. It also noted the company's plans to expand into nuclear power and hydro generation while broadening its customer base beyond state distribution companies.
Asset Strategy Differentiates Adani Power
According to IIFL Capital, Adani Power built a portfolio of about 7.3 GW of acquired thermal assets at an average capital cost of around Rs42 million per MW. The brokerage said this approach enabled the company to add operational capacity, land and fuel linkages while avoiding the longer timelines associated with greenfield projects.
The report also said Adani Power secured equipment orders ahead of the latest thermal power investment cycle, allowing it to lock in lower project costs than many peers.
"We like Adani Power's strategy of capturing counter-cyclical arbitrage in asset creation, which earns outsized returns in a structurally utility sector," IIFL Capital said in its initiation report.
The brokerage added: "With a large growth pipeline, industry-leading execution, and complementary group renewables and energy-management businesses, we estimate Adani can quadruple EBITDA by FY33-35."
Brokerage Expects Strong Earnings Growth
IIFL Capital forecasts about 20% EBITDA compound annual growth between FY26 and FY29 as projects under construction are commissioned.
The brokerage's sum-of-the-parts valuation implies a 12-month target price of Rs240 a share. It said the valuation reflects Adani Power's expected growth profile and profitability relative to peers.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
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