Adani Green Can Rally 75%, Says Jefferies As It Initiates Coverage With A 'Buy'

Adani Green Energy Ltd. got a 'buy' rating after Jefferies India Pvt. initiated coverage on the stock, citing the possibility of a 75% upside to the current stock price in a bull-case scenario given the capacity expansion target.

The brokerage also cited the nearly doubling of the company's profit in the first quarter of fiscal 2025. The Adani Group company's net profit rose 95% year-on-year to Rs 629 crore in the quarter ended June 2024, according to an exchange filing on Thursday.

Adani Green Energy Q1 Results: Key Highlights (Consolidated, YoY)

• Revenue rose 31% to Rs 2,834 crore.

• Ebitda rose 26% to Rs 2,420 crore.

• Ebitda margin at 85.4% versus 88.9%.

• Net profit rose 95% to Rs 629 crore.

The brokerage has set a target price of Rs 2,130 apiece, implying a potential upside of 17% from the previous close. This base case scenario projects that Adani Green's installed capacity will reach 29.7 gigawatts by fiscal 2027, with revenue and profit after tax growing at a compound annual growth rate of 38% and 70%, respectively, over fiscal 2024-2027. The target price of Rs 2,130 is based on a 25-times EV/Ebitda multiple for September 2026.

However, Jefferies also has a more optimistic upside scenario, suggesting a potential stock price of Rs 3,180, a 75% upside from the current price, citing Adani Green’s 50 gigawatt capacity target by 2030, with higher merchant capacity making up 20% of the mix by fiscal 2026 compared to 8% in the base case, and a higher capacity utilisation factor at 35% versus 30% in the base case. 

Jefferies pointed out several strengths that support Adani Green's growth, including strong industry tailwinds and power demand growth exceeding 7%. The brokerage believes that power capex investments projected should rise 2.2-times to $280 billion in fiscal 2024–2030. 

The brokerage also highlighted the significance of the Khavda project in Gujarat, where Adani Green is developing 30 gigawatts of its planned 50 gigawatt capacity by 2030. Jefferies estimates a 15% industry market share by 2030, up from less than 10% currently. 

Adani Green's current net debt-to-equity ratio is high due to its aggressive capacity expansion, but it is expected to decrease to 2.8-times by 2030, Jefferies said. According to the note, the company's capital management has been prudent, including advance land acquisition and locking rates through long-term bonds.

Jefferies also identified the potential risks—execution delays, particularly at the Khavda project—and aggressive bidding strategies. Whereas the catalysts are the pickup in the renewable project execution and ramp-up of hydro-pumped storage for round-the-clock bids.