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Adani Power shares climb despite market correction; BSE, NSE seek clarity on 'Bangladesh supply restoration'

Adani Power shares climb despite market correction; BSE, NSE seek clarity on 'Bangladesh supply restoration'

Bourses BSE and NSE sought clarification from the Adani Group firm with reference to a news report, titled "Bangladesh seeks full power supply restoration from Adani plant."

Prashun Talukdar
Prashun Talukdar
  • Updated Feb 11, 2025 4:19 PM IST
Adani Power shares climb despite market correction; BSE, NSE seek clarity on 'Bangladesh supply restoration'Adani Power's stock rose 1.39 per cent to close at Rs 498.15.

Shares of Adani Power Ltd (APL) settled higher on Tuesday to even as the sell-off in domestic benchmarks intensified. The stock rose 1.39 per cent to close at Rs 498.15. At this closing value, it has corrected 27.86 per cent in the last six months.

Bourses BSE and NSE sought clarification from the Adani Group firm with reference to a news report, titled "Bangladesh seeks full power supply restoration from Adani plant". A response from the company is awaited at the time of publishing this story.

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Separately, Jefferies has initiated its coverage on APL shares with a 'Buy' call with a potential upside target of Rs 660. "APL is India's second-largest thermal power generation company after NTPC, on its journey to raise capacity by 1.7x from 17.6 GW to 30.7 GW by 2030. Land requirements and financing plans are in place. Close co-ordination with BHEL for equipment delivery and inhouse EPC are ensuring capex is on schedule. Thermal capacity in an overall peak deficit scenario with merchant exposure is a positive. Initiate coverage at Buy," it stated.

The brokerage said that the company operates 12 power plants across eight states with 87 per cent capacity tied up with power purchase agreements (PPA). "98 per cent of the open capacity is closer to coal mines, enabling economic sourcing of coal. Coastal plants (43 per cent capacity) are dependent on imported coal but have a fuel cost pass-through/ index-linked price escalation in place," it added.

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Jefferies expects APL's merchant capacity to be 12-13 per cent by FY30E, with an EBITDA contribution of 19-20 per cent compared to around 30 per cent currently. "We assume Rs 6/unit merchant realisations, vs Rs 7/unit average realisation for APL in FY24. Every 5 per cent rise in merchant realisation is a 2 per cent rise in FY27E EBITDA. We believe power demand should recover back to 7 per cent levels vs recent weakness, which is similar to the past capex upcycle phase of FY03-09. This is a key trigger for the stock," it highlighted.

"We estimate 10 per cent EBITDA CAGR for APL in FY24-27E, rising to 19 per cent CAGR over FY27E-30E as new capacity becomes operational. We value APL at 15x EV/EBITDA, vs 17x for JSW Energy (JSWE) given 50 per cent renewable energy exposure for JSWE. This is at a premium to NTPC (implied 11x target multiple) given merchant upside for APL," it further stated.

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Mentioning the risks, the foreign brokerage said past PPA issues returning and impacting EBITDA, lower merchant realisations, demand disappointment and payment delays for the 1.6 GW Godda power plant (PPAs with Bangladesh) may impede the above view.

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: Feb 11, 2025 4:19 PM IST
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