- Shares of Adani Energy Solutions rose after Morgan Stanley raised its target price by over 70%
- Morgan Stanley kept an Overweight rating and boosted FY27 and FY28 EPS estimates by 9%
- The firm cited multiple growth drivers including power transmission and smart metering businesses
Shares of Adani Energy Solutions climbed on Wednesday as Morgan Stanley sharply raised its target price on the stock, citing improving earnings visibility and multiple long-term growth drivers linked to India's expanding power infrastructure.
Morgan Stanley maintained its 'Overweight' rating on the stock while increasing its target price to Rs 1,943 from Rs 1,133 — a hike of more than 70%. The brokerage also raised its FY27 and FY28 earnings-per-share estimates by 9% to 26%.
Rather than pointing to a single catalyst, Morgan Stanley argued that Adani Energy is entering a period where several businesses could contribute to growth simultaneously. The brokerage said the company is well positioned to benefit from India's power demand "supercycle", supported by its leadership in power transmission, smart metering and emerging data centre power solutions.
It expects these businesses to drive a "step-change" in earnings, returns and valuation over the coming decade.
Morgan Stanley now forecasts profit after tax to grow at a compound annual rate of 39% through FY30, while return on capital employed (RoCE) is expected to improve to around 16%, from roughly 10% currently, as the company's higher-margin, asset-light contracts and infrastructure (C&I) business scales up.
The brokerage also highlighted several near-term catalysts. It expects Adani Energy to sustain a 20-25% share of new interstate transmission project awards, while the distribution business is projected to continue expanding its regulated asset base.
Another potential growth lever is smart metering. Morgan Stanley noted that the proposed acquisition of IntelliSmart could create India's largest smart-metering platform, with a sizeable pipeline of meters yet to be tendered. The brokerage also sees additional upside if data centre investments accelerate faster than expected, leading to higher transmission spending than currently factored into its forecasts.
The stock rose as much as 3.93% intraday to Rs 1,744 before trimming gains to trade around Rs 1,728, still up nearly 3% in afternoon trade.
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