Adani Green Energy shares in focus today; here's why

Shares of Adani Green Energy Ltd are in focus on Thursday after the Central Electricity Regulatory Commission (CERC) reportedly questioned the transfer of 2,333 MW capacity of Azure Power India to the Adani group firm in the 7,000 MW solar power project for Andhra Pradesh, in the wake of bribery charges.

The recent US indictment alleges that Indian officials received $265 million in bribes between 2021 and 2022 to secure solar power-supply contracts across multiple states, including Andhra Pradesh. Of this, $228 million was allegedly paid to influence Andhra Pradesh’s state electricity distribution companies, leading to an agreement to purchase approximately seven gigawatts of solar power—the largest commitment of any Indian state.

The regulator of power sector in India asked the Solar Energy Corporation of India Limited (SECI) to explain how Azure was substituted as power developer by Adani Green Energy for 2,333 MW of power to be supplied to Andhra Pradesh, the Economic Times reported.

Adani Green Energy recently clarified that only Azure & CDPQ officials were charged with bribery in the US DoJ indictment and that there were no bribery charges against the Adani group executives. The indictment also does not specify any quantum of any fine or penalty, it suggested.

Following this, Adani Green Energy shares are up 20.27 per cent in the past five sessions. That said, the stock is still down 23 per cent for the past one month.

In December 2021, a power supply agreement (PSA) was signed between SECI and Andhra Pradesh discoms for 7,000 MW of power, of which 4,666 MW had to be supplied by Adani Green Energy and 2,333 MW by Azure, the ET report noted.

A power purchase agreement (PPA) to this effect was signed between SECI and AGEL and another between SECI and Azure. This was approved in April 2022 by the CERC, the report said.

However, Azure backed out of this and its part of 2,333 MW was transferred to Adani Green Energy, the ET report added.

Foreign brokerage Bernstein in a note this week suggested a target price of Rs 800 for Adani Green Energy. It noted that in 2023, Adani Green had a significant part of its debt up for repayment in FY25, including a $750 million holdco bond, which had fallen sharply on following the Hindenburg Research event.

This time, the repayment schedule is more balanced, except for a payment of Rs 9,600 crore in H2FY25, of which Rs 8,900 crore is due to dollar revolving facility taken by the company. But then again, considering the company is sitting on Rs 59 billion of cash, it seems lesser of a concern, Bernstein said.