Adani Energy Solutions (Buy)

Target: ₹1,300

CMP: ₹805.65

Adani Energy Solutions (AESL) in its 3Q update highlighted that it maintained robust system availability at 99.7 per cent. The company added 225 circuit kilometer (ckm) in its transmission network taking the total to 26,485 ckm. Two new projects have boosted the project pipeline to ₹54,700 crore from ₹17,000 crore at the start of FY25.

Smart metering is a new high-growth area. Capital management programme focus is on reducing volatility in interest costs through long-tenure bonds.

AESL won two transmission bids in Q3, both in Rajasthan, related to the renewable energy park. Company has a market share of 24 per cent in competitive bids, which is up from 17 per cent given the recent win. AESL’s management says it believes in minimising volatility in its asset base across parameters: 1) debt is being refinanced and raised to match the life of the respective asset at a fixed rate as far as possible; vendor back-to-back arrangements to limit the impact of commodity price changes; and 3) land studies for faster project commissioning.

Established competence in commissioning enduring transmission line networks below budgeted costs and tenures and expanding B2C revenues by providing additional durable sales services to consumers on distribution are key investment triggers.