Adani Power Set for Major Growth: Jefferies Initiates Coverage with 30% Upside Potential

Adani Power: Poised for Expansion and Strong Market Returns

Jefferies' Bullish Outlook on Adani Power

Leading brokerage Jefferies has initiated coverage on Adani Power Limited (APL) with a "Buy" rating, setting a target price of ₹660 per share. This represents a 30% upside from its current trading price of ₹504.

As India’s second-largest thermal power producer, after NTPC, Adani Power is on an aggressive expansion trajectory, aiming to increase its capacity from 17.6 GW to 30.7 GW by 2030. This expansion aligns with India’s growing energy demand, presenting a strong investment opportunity.

Key Drivers of Growth: Expanding Thermal Power Capacity

Jefferies’ positive outlook is driven by Adani Power’s well-structured capacity expansion plan, backed by:
✅ Secured land requirements and clear financing plans
✅ Partnership with BHEL for timely equipment deliveries
✅ In-house EPC capabilities ensuring projects stay on schedule
✅ Merchant power exposure, benefiting from India's peak power deficit scenario

Given these factors, Adani Power is well-positioned to meet India's rising electricity demand, making it an attractive long-term bet.

Strategic Power Portfolio & Cost-Efficient Operations

Adani Power operates 12 power plants across eight states, with 87% of its capacity secured through long-term Power Purchase Agreements (PPAs). This provides stable and predictable revenues, mitigating market risks.

Additionally, 98% of its open capacity is located near coal mines, ensuring cost-effective coal sourcing. Meanwhile, 43% of its capacity is in coastal plants that rely on imported coal but benefit from fuel cost pass-through agreements, reducing risk from coal price volatility.

Merchant Power Business & Earnings Growth

Jefferies expects Adani Power’s merchant capacity to be around 12-13% by FY30, with a 19-20% EBITDA contribution, compared to the current 30% contribution.

• The brokerage assumes merchant power realizations at ₹6/unit (vs. ₹7/unit in FY24).

• A 5% increase in merchant rates could boost FY27 EBITDA by 2%, reflecting the impact of pricing power.

• Power demand is projected to recover to 7% annual growth, similar to past infrastructure upcycles (FY03-09), acting as a key growth catalyst for Adani Power.

Strong Financial Performance: Consistent Profitability

Adani Power’s financial strength reinforces Jefferies’ bullish stance. In Q3 FY25, the company reported:
📈 Net profit growth of 7.4% YoY to ₹2,940 crore (vs. ₹2,738 crore in Q3 FY24)
📈 Consolidated EBITDA surged 23% YoY to ₹6,185 crore (vs. ₹5,009 crore in Q3 FY24)
📈 Revenue rose 11% YoY to ₹14,833 crore, driven by higher power volumes

The company’s profitability was further supported by one-time income, reflecting strong operational efficiency and cost management.

Projected Earnings Growth & Valuation Upside

Jefferies estimates a 10% EBITDA CAGR from FY24 to FY27, accelerating to 19% CAGR from FY27 to FY30 as new power plants become operational.

• Given APL’s strategic expansion and stable cash flows from PPAs, Jefferies sees the stock as undervalued at current levels.

• With a target price of ₹660, Adani Power remains an attractive long-term investment for growth-focused investors.

Market Outlook: Adani Power’s Future Looks Bright

With India’s power demand rising, Adani Power’s aggressive capacity expansion, cost-efficient coal sourcing, and strong PPAs position it well for long-term success.

Key catalysts to watch:
✅ Execution of new power projects
✅ Stability in merchant power pricing
✅ Potential recovery in industrial electricity demand

Given these growth triggers, Adani Power stands out as a strong investment opportunity in India’s evolving energy landscape.