Shares of Adani Green Energy Ltd cracked nearly 7 per cent during the trading session on Monday after the Hindenburg Research latest round of allegations. However, domestic brokerage firm Emkay Global Financial Services initiated coverage on the Adani Group stock on Friday, citing a strong upside of more than 50 per cent in the stock.
In its latest report, Hindenburg Research has alleged links of SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch with an offshore fund tied to the Adani group. The US-based short seller said SEBI was tasked with investigating investment funds relating to the Adani matter.
Adani Green Energy's (AGEL) operational renewable energy (RE) capacity CAGR was 41 per cent for the last 5 years. It has well secured sites for solar-wind development in excess of 50GW in Gujarat and Rajasthan and further 5GW for PSP with evacuation visibility. The momentum now on would be concentrated in the Gujarat-Rajasthan supersites, said Emkay's IC report.
"Resource yield in these states is one of the highest globally, with 2,060kWh/sqmtr of solar irradiance and 8mtr/sec wind speed which renders 33 per cent solar and over 35 per cent wind CUF. We believe AGEL’s plain vanilla RE market share should grow to 15 per cent by FY30E from 8 per cent in FY24 and merchant capacity should rise to 20 per cent from 5-6 per cent," it said.
Before making a recovery, shares of Adani Green Energy tumbled 6.96 per cent to Rs 1,656.05 during the trading session on Monday, with its total market capitalisation slipping to Rs 2.62 lakh crore more. The scrip had settled at Rs 1,780.10 in the previous trading session on Monday.
AGEL has a diversified pool of capital, with $3.4 billion of revolving construction facilities from banks along with access to cheaper long term global bond markets for operational phase. Post Rs 7,000 crore of residual promoter infusion, future growth would be ensured through internal accruals, added the Emkay report.
"AGEL’s consolidated net debt has risen to Rs 53,900 crore as of FY24 from Rs 9,200 crore in FY18, but leverage ratios peaked in FY22 and net debt-to-EBITDA stands at 7.4 times as of end-FY24. By FY30E, this should decline to 3.6 times, despite net debt rising to Rs 1.86 lakh crore owing to the Rs 2.36 lakh capex. We expect AGEL’s cost of debt to gradually decline," said Emkay.
Adani Green Energy reported a 38 per cent year-on-year (YoY) growth in its consolidated net profit at Rs 446 crore for the first quarter ended June 2024. Revenue from operations in the reporting period increased 31 per cent YoY to Rs 2,834 crore. Revenue from power supply increased 24 per cent YoY to Rs 2528 crore, while Ebitda from the segment increased 23 per cent YoY to Rs 2,374 crore.
Emkay Global sees Adani Green's stock valuation attractive. "We value AGEL at 15 times FY30E EV/Ebitda, discounted at 12 per cent (CoE) to Sep-25 which is reasonably conservative and backed by the 30-60 per cent revenue-earnings CAGR," it added with a 'buy' rating and a target price of Rs 2,550, suggesting an upside of 54 per cent from day's low.