Adani Power (Buy)

Target: ₹806

CMP: ₹514.90

Rising power demand supported by lower imported coal prices and improved domestic coal availability has substantially improved Adani Power Ltd’s (APL) average PLF, which has risen from 48 per cent in FY23 to 72 per cent in H1FY25 — marking its highest level in seven years. This remarkable progress has exceeded our previous estimates and strengthened the company’s revenue performance and operational profitability.

In FY24, APL achieved YoY growth in revenue and EBITDA of 29.9 per cent to ₹50,351 crore and 81 per cent to ₹18,181 crore, respectively. Similarly, in H1FY25, revenue and EBITDA recorded a strong y-o-y growth rate of 17.9 per cent and 32.1 per cent, respectively.

Power demand in India is surging, driven by rising manufacturing activities and growing adoption of white goods & gadgets in households. With RE unable to fully meet the rising energy needs, the widening peak demand-supply gap underscores the necessity of augmenting base load thermal power capacity.

APL, India’s largest private pure-play thermal power producer, is strategically positioned with robust capacity expansion plans to address this critical demand. We recommend Buy with an upward revised DCF based price target of ₹806 (13.8X FY27 EV/EBITDA).