Adani Power Shares
Adani Power is focused on expanding its thermal power capacity, aiming to reach a total of 30.67 GW by FY31. This growth plan will see its share of India’s thermal power market grow from 6% in FY24 to 11% by FY31.
Ventura Securities recently issued a “buy” recommendation for Adani Power, raising its target price to Rs 806, implying a potential upside of 54.5%.
The firm believes that as India’s electricity demand grows due to expanding manufacturing and the growing use of electronics in homes, renewable energy (RE) alone will not be enough to meet these needs.
This makes it even more important to expand thermal power capacity to bridge the growing gap between peak demand and supply.
Adani Power’s revenue and EBITDA are expected to grow at a compound annual growth rate (CAGR) of 11.8% and 11%, respectively, between FY24-27, reaching Rs 70,284 crore and Rs 24,864 crore by the end of this period.
However, net profit is estimated to decline from Rs 20,829 crore in FY24 to Rs 13,121 crore in FY27, primarily due to one-time discom claims of Rs 8,657 crore and net tax credit of Rs 37 crore in FY24.
The company’s EBITDA margin may decline marginally by 73 basis points to 35.4% due to initial costs related to new power capacities. This could lead to a decline in return on equity (RoE) to 16.2% and return on invested capital (RoIC) to 16.9% by FY27.
Despite this, Adani Power has maintained a healthy financial position, with a working capital-to-sales ratio of less than 30% to manage short-term funding and a manageable net debt of Rs 30,985 crore.
The company recorded robust year-on-year growth of 29.9% in revenue (Rs 50,351 crore) and 81% in EBITDA (Rs 18,181 crore) in FY24. Revenue and EBITDA continued to grow steadily in the first half of FY25, growing at 17.9% and 32.1% year-on-year.
Also Read: Adani Power Share Price Target
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