Shares of Adani Power made one of the best comebacks last year after suffering a major setback earlier in the year due to the Hindenburg report. Even after the stock’s massive rally, analysts at Ventura think the Adani Group stock still has some steam left.

The Adani Power Analyst: Analysts at Ventura initiated coverage on the stock with a “buy” rating and a target price of ₹707 over the next two years. The target indicates a 34% upside from the stock’s last closing price of ₹525.15.

The Adani Power Thesis: The brokerage highlighted that Adani Power is the largest private thermal power producer in India, with a current installed capacity of 15.2 gigawatts, contributing 7.1% to India’s total thermal power generation capacity of 214 GW. With an additional 1.6 GW under construction, the company is set to expand its footprint further, targeting a capacity exceeding 16.8 GW by FY27, the analysts added.

From FY21 to FY23, the energy major exhibited robust financial performance. The installed capacity grew at a Compound Annual Growth Rate (CAGR) of 5%, reaching 13.6 GW by the end of FY23. Revenue witnessed a 22% CAGR, escalating from ₹21,266 crore to ₹38,773 crore, fueled by improved asset utilization and the commissioning of new projects. Despite facing challenges such as a shortage of domestic coal leading to an increased reliance on international coal, the company demonstrated resilience, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) growing at an 8% CAGR from ₹8,669 crores in FY21 to ₹10,045 crores in FY23.

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The Profit After Tax (PAT) substantially increased from ₹1,270 crores to ₹10,727 crores, the analysts attributed the multifold rise to tax benefits derived from carried forward losses.

The analysts also prepared a Bull and Bear case scenario, the Bull case assumes a 10% higher revenue and a ~230 basis points increase in EBITDA margins, resulting in a target price of ₹765 per share (8% upside to the target price).

Conversely, the Bear case contemplates a 5% lower revenue and flat EBITDA margins at ~20%, yielding a target price of Rs. 596 per share (15% downside to the target price) at 22x FY26 EV/EBITDA.

Price Action: Adani Power’s share price was down 0.98% to trade at ₹520 in early trade on Monday.

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