Clean Max Enviro Energy Solutions could see earnings accelerate as it expands its commercial and industrial renewable energy capacity, with Macquarie forecasting a 51% compound annual growth rate in EBITDA through FY29.
The broker expects CleanMax to add about 5 GW of incremental capacity through FY29, taking its growth beyond its existing renewable energy portfolio. Macquarie also sees data and artificial intelligence customers supporting demand, with the segment accounting for about 42% of CleanMax's contracted capacity.
Macquarie initiated coverage of CleanMax with an Outperform rating and a scenario-weighted target price of Rs 1,700.
"We forecast c.5 GW of incremental capacity through FY29E, driving a Power Sales EBITDA CAGR of 50%+ over FY26-29E," Macquarie said in its initiation report.
The broker forecasts CleanMax's revenue and EBITDA to grow at compound annual rates of 42% and 51%, respectively, through FY29.
C&I Demand
Macquarie said India's commercial and industrial renewable energy market combines rising electricity demand with a large potential for customers to switch from conventional power supply.
Commercial and industrial users account for more than half of India's electricity consumption, according to the broker. It said renewable energy penetration could rise faster than overall demand as companies seek lower power costs and decarbonisation.
"We view CleanMax as a corporate-energy platform rather than a conventional IPP, supported by c.600 customer relationships, multi-state regulatory capabilities and integrated energy solutions," Macquarie said.
The broker said CleanMax's customer base and business model support capacity growth, while data and artificial intelligence transactions provide additional potential for expansion.
Macquarie noted that data and AI transactions account for about 42% of CleanMax's contracted capacity.
The broker also said CleanMax's customer relationships can support repeat business and allow it to benefit from rising demand for renewable power among corporate customers.
Earnings Growth
Macquarie expects CleanMax to add about 5 GW of capacity through FY29 and said the company's earnings growth should be supported by higher Power Sales capacity.
It expects revenue to rise at a 42% compound annual growth rate and EBITDA at 51% through FY29, driven by the addition of about 5 GW of incremental capacity.
The broker said the company's lower-margin A&M business has weighed on margins, while capex of about Rs 2,600 crore keeps free cash flow negative and leverage elevated.
"Lower borrowing costs, strategic co-investments and EBITDA growth reduce net debt/EBITDA towards 7.5x by FY29E," Macquarie said.
Macquarie also expects CleanMax to benefit from customer savings compared with conventional procurement, while its regulatory and execution capabilities could support capacity additions.
The broker said it expects more than 2 GW of new capacity additions and an EBITDA compound annual growth rate of more than 60% over FY26-FY29.
Valuation
Macquarie's scenario-weighted valuation gives CleanMax a target price of Rs 1,700, implying about 26% upside from the current level cited in the report.
The broker identified higher commissioning guidance for FY27 and FY28, greater transmission availability and lower borrowing costs as potential catalysts.
Macquarie said CleanMax is positioned to capture growth in C&I renewables through its customer relationships, breadth and multi-state regulatory capabilities.
"We expect capacity additions to support strong earnings growth and initiate coverage at Outperform," Macquarie said.
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