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Adani Power: 4 reasons why Jefferies has 'Buy' on Adani group stock

Adani Power: 4 reasons why Jefferies has 'Buy' on Adani group stock

Jefferies said Adani Power appears firmly on track to double its Ebitda by FY30, backed by robust capacity expansion, reduced earnings volatility, and improved visibility on overseas payments.

Amit Mudgill
Amit Mudgill
  • Updated Jul 9, 2025 8:14 AM IST
Adani Power: 4 reasons why Jefferies has 'Buy' on Adani group stock  The Adani Power  management is working to lower its risk profile by reducing reliance on merchant sales, Jefferies said.

Jefferies has reiterated its ‘Buy’ rating on Adani Power following a recent management meeting, citing four key reasons behind its bullish stance on the stock. According to the foreign brokerage, Adani Power is well-positioned for strong capacity addition, backed by a healthy balance sheet. Importantly, its risk profile is steadily improving, with new capacity being secured through profitable power purchase agreements (PPAs), which offer earnings visibility.

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Jefferies highlighted the company's close coordination with BHEL for timely equipment deliveries, along with efficient in-house project execution, which is helping ensure that capital expenditure remains on schedule.

Investor concerns over receivables from Bangladesh have also eased recently, the brokerage noted, after fresh payments were received. With these positives in play, Jefferies has set a target price of Rs 690 for the stock.
In its upside case scenario, the brokerage sees stock at Rs 765. It suggested a target of Rs 365 in the downside scenario. 

Adani Power: Ebitda to double, 30 GW capacity by FY30

Jefferies said Adani Power appears firmly on track to double its Ebitda by FY30, backed by robust capacity expansion, reduced earnings volatility, and improved visibility on overseas payments. Adani Power's total capacity has jumped 29 per cent over FY23–25 to 17.6 GW, with 2.3 GW of the 3.9 GW addition coming via acquisitions. These acquired assets are expected to ramp up operations between FY25 and FY27. The management has set an ambitious target of reaching 30 GW capacity by FY30.

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Importantly, orders for 11.2 GW worth of equipment have already been placed with BHEL at competitive rates. Jefferies noted that faster project execution is being ensured by Adani Power's in-house teams, which are handling site erection directly upon equipment delivery. Over 3 GW of this pipeline is expected to be operational by the first half of FY28, offering visibility on strong double-digit Ebitda CAGR over FY25–30.

Bangladesh payment 

Concerns regarding receivables from Bangladesh have eased significantly. Roughly 9 per cent of Adani Power's capacity — about 1.6 GW — is tied to a long-term power purchase agreement (PPA) with Bangladesh. Political turmoil in the country in 2024 had caused significant payment delays, raising doubts about the sustainability of the PPA.

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However, a recent media report indicated that Bangladesh made a payment of $384 million in June 2025, reducing Adani Power's outstanding to $500 million. APL’s average receivable days stood at 83 in FY25 — but only 55 days excluding Bangladesh — implying that delays from Bangladesh extended beyond six months, Jefferies said.

The recent payment improves visibility on the reliability of future cash flows from the region, it added. 

De-risking biz via PPAs

The Adani Power  management is working to lower its risk profile by reducing reliance on merchant sales, Jefferies said. By FY30, merchant capacity is expected to decline to 10–12 per cent of the total mix, down from 18 per cent at the end of FY25. 

Despite plans to nearly double capacity, Adani Power's net debt-to-equity ratio is forecast to improve slightly, from 0.7 time currently to 0.6 time by FY30, driven by strong internal cash generation.

Outpacing NTPC in growth
Adani Power is emerging as a faster-growing thermal power player compared to state-run NTPC. While NTPC is expanding its thermal capacity by 1.3 times, Adani Power is targeting a 1.7 times increase. With the government maintaining its focus on peak power containment, Jefferies believes India’s thermal targets could be revised upward, potentially allowing Adani Power to lift its own capacity targets.

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Jefferies said Adani Power is currently valued at 15 times EV/Ebitda— a 36 per cent premium to NTPC’s implied 11 times multiple, reflecting its faster growth, greater exposure to merchant markets, and improving fundamentals.
 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jul 9, 2025 8:14 AM IST
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