Adani Energy Solutions Ltd, which has fallen 50 per cent from its August 2024 high, received a 'Buy' rating from Elara Securities. The domestic brokerage suggested a target price of Rs 930 apiece on the Adani group stock, hinting at a potential 37 per cent upside ahead.
For FY24-27, Elara is factoring in an Ebitda growth of 26 per cent compounded annually and an EPS CAGR of 29 per cent.
Elara Securities said the transmission Ebitda of Adani Energy Solutions is likely to double to Rs 7,600 crore by FY27, driven by India's renewable energy (RE) target, 20-25 market share in the Rs 84,000 crore near term transmission bid and Rs 54,800 crore project pipeline.
In distribution, Mundra SEZ demand is set to surge from 50MW to 5GW, pushing regulated asset base (RAB) to Rs 1,500-2,000 crore while Mumbai operations would get annual capex of Rs 1,200-1,500 crore, which would increase regulated equity to Rs 6,000 crore by FY27, it said,
"AESL also dominates the smart meters space with a 17 per cent market share at 23 million meters, sustaining an Ebitda margin of 85 per cent. We initiate AESL with a Buy rating and a SOTP-based target of Rs 930," Elara said.
The brokearge said Adani Energy has secured five additional transmission projects valued at Rs 38,800 crore following its QIP in FY25. These new projects are likely to generate incremental Ebitda of Rs 7,000 crore, effectively doubling Ebitda from the current Rs 4,000 crore to around Rs 7,600 crore by FY27E.
"AESL operates two distribution companies, one at Mumbai and the other at Mundra. Mumbai RAB is Rs 7,600 crore as on FY25YTD while Mundra RAB is Rs 50 crore. Power demand at Mundra SEZ is likely to rise significantly, from the current 50MW to 5GW, driven by the Adani Group's plans to establish three major businesses in the SEZ. Growth is likely to increase RAB of Mundra’s distribution company in the range of Rs 1,500-2,000 crore by FY27," Elara said.
AESL’s experience in operating in operating Mumbai DISCOM has led it to emerge as a key player in this program, securing an orderbook of 23 million as on FY25YTD. Elara noted that the installation of each meter needs an upfront capital investment of Rs 5,800. During the 90-month agreement term, the company is likely to generate revenue of Rs 12,000 per meter. The company is set to sustain an EBitda margin of 85 per cent in this vertical, Elara said.