Adani Power Rated New 'OverWeight' At Morgan Stanley; Stock Rallies 9% After SEBI Clears Hindenburg Case
Morgan Stanley initiated 'Overweight' on Adani Power with a target price of Rs 818.
Adani Power Ltd. rose 8.8% on Friday after the Securities and Exchange Board of India gave a clean chit to group firm in Hindenburg case.
On Thursday, Markets regulator, Securities and Exchange Board of India cleared Adani Group and its Chairman Gautam Adani of allegations levelled by US based Hindenburg Research of routing funds through three entities to hide related party transactions.
Besides, Morgan Stanley initiated 'Overweight' on Adani Power with a target price of Rs 818. The brokerage believes that Adani Power is a good illustration of turnaround in India's corporate history, with resolution on most regulatory issues & multiple value-accretive acquisitions.
Morgan Stanley expects Adani Power to deliver strong earnings growth driven by timely completion of projects & more PPA wins in the medium term.
"New coal PPAs should improve investor confidence in earnings power," the brokerage said.
The brokerage, however, noted that rising renewable energy penetration has lower emissions, but is constrained by intermittency, weather impact, and it is less comparable in cost, as RE needs to be paired with a battery or a pumped storage plant, transmission is not adequately utilised, and grid stability needs investments. "Hence, we believe coal holds the key to India's energy security, with nuclear being a driver in the next decade", the brokerage added.
India is planning to add 80 GW of coal-based power capacity by FY32, supported by a robust pipeline of over 20 GW in power purchase agreements (PPAs). Adani Power, India’s largest independent power producer and second only to NTPC in overall coal capacity and generation, is set to play a major role in this expansion, the brokerage noted.
Adani Power currently holds an 8% market share, which is projected to grow to 15% by FY32, with a total portfolio of 41.9 GW, a 2.5 times increase from FY25. The company has resolved most regulatory hurdles and maintains a strong balance sheet, with net debt/Ebitda at 1.5 times in FY25, the brokerage noted.
