Analysts at Ventura see Adani Energy becoming a one-stop solution provider in the power sector in the coming year.

The Adani Energy Analyst: The analysts at Ventura reinstated the “buy” rating for the stock with a 24-month target price of ₹1,600. The target suggests an around 60% upside from the stock’s current market price of around ₹985.

The Adani Energy Thesis: The analysts said that Adani Energy Solutions stands as a prominent private entity in the transmission & distribution (T&D) sector, boasting an extensive portfolio encompassing 20,422 circuit kilometres (ckm) of transmission lines and 54,600 MVA (Mega Volt Amp) of power transformation capacity. With a vision to establish 30,000 ckm of transmission lines by 2030, the Adani Group company is strategically positioning itself to leverage both organic and inorganic growth opportunities, the analysts added.

The brokerage pointed out that Adani Energy commands a 35% market share in TBCB (Tariff-Based Competitive Bidding) based private power transmission assets. As per the analysts, the company’s prowess in project execution and Operations & Maintenance (O&M) is underscored by its high ‘total availability factor’ of 99.7% and best-in-class EBITDA margins exceeding 91%.

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The brokerage also highlighted that the government’s emphasis on enhancing private sector involvement in the burgeoning power T&D market positions Adani Energy favourably. The brokerage attributed this to the energy giant’s exceptional project execution capabilities, effective capital management, and active participation in private bidding endeavours.

The brokerage said that Adani Energy’s prudent debt management practices alleviate concerns regarding growth funding, with total debt being less than the value of critical assets acquired through government-led bidding processes.

The brokerage remarked that the upcoming segment of smart meters in India presents promising growth prospects for Adani Energy, poised to significantly contribute to its revenue in the coming years. With LOAs secured for 2.11 crore smart meters by December 31, 2023, totalling a contract value of ₹25,100 crore over a 120-month period, AESL is well-positioned to capitalize on the untapped market potential of 13.5 crore smart meters by 2026. This translates to an expected revenue contribution of ₹3,898 crore from the smart metering segment by FY27.

Price Action: Adani Energy’s share price was down 6.59% to trade at ₹968.90 on Wednesday afternoon.

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