Adani Energy Solutions Gets 'Buy' From ICICI Securities As It Sees 30% Upside—Here's Why

Adani Energy Solutions Ltd. got a 'buy' rating as ICICI Securities Ltd. initiated coverage on the stock, with a target price of Rs 1,318 per share, indicating a potential upside of 30%.

The brokerage sees strong earnings growth ahead, supported by the company’s focus on expanding its smart metering and unregulated business segments.

Adani Energy Solutions has transitioned from operating regulated transmission assets to emerging as a leader in both competitively built transmission networks and smart metering solutions, the note said. The company has also entered unregulated businesses, tapping into new growth opportunities.

Earnings growth is expected to be driven by new transmission projects, expansion in the Mumbai distribution business, and the scaling of smart meter assets. ICICI Securities estimates a 32% Compound Annual Growth Rate in Adani Energy Solutions' Ebitda between fiscal 2024 and fiscal 2027, primarily due to contributions from new transmission bids, smart meter projects, and growth in distribution areas.

The company initially focused on developing cost-plus transmission assets, with investments of Rs 11,000 crore and regulated equity of Rs 3,300 crore. It made its entry into the distribution business by acquiring the Mumbai DISCOM, resulting in a 9% CAGR growth in regulated equity from fiscal 2020 to fiscal 2024, reaching Rs 6,000 crore.

The company has significantly ramped up its unregulated business, becoming the largest private player in the transmission space with a 20% market share, the note said.

Adani Energy Solutions has secured Rs 17,000 crore worth of transmission assets between fiscal 2016 and first half of fiscal 2025 and has leveraged its experience in operating Mumbai DISCOM to establish a smart meter business valued at Rs 27,200 crore.

India's upcoming bids for Rs 1.6 trillion worth of new transmission assets and Rs 1.2 trillion in smart meter projects over the next 12 to 18 months provide a significant opportunity for Adani Energy Solutions’ unregulated business, supporting the brokerage's positive outlook.

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