Target: ₹600

CMP: ₹483.40

Adani Power has emerged unscathed after prolonged disputes relating to its existing power purchase agreements (PPAs) for operating assets. It has resolved the issues with culmination of legal cases in favour of Adani, renegotiation of a few (PPAs) to reduce the fuel risk and tying up with cheap coal under bids at attractive prices. Adani has received compensation for its supply in the past and higher tariff in its existing PPAs.

Adani Power’s balance sheet has strengthened via infusion of promoter fund and debt reduction. Excess cash generated was utilised to repay external debt. This has led to healthy balance sheet which is being utilised to pursue growth through organic and inorganic expansion. Moreover, the spread on merchant prices has considerably improved owing to demand-supply mismatch especially during peak hours. Adani is looking to tie up its new capacities under long-term PPAs. It has tied up PPAs for about 3 GW at attractive tariffs.

India has started facing an adverse demand-supply situation for base load. Adani is ahead of the competition with untied portfolio and new capacities under construction.

We expect states to come up with new tenders in FY26 for long-term power procurement. The stock is trading at 12.2x FY27E earnings. We resume coverage with Buyand DCF-based TP of ₹600.