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ICICI Securities Report
We recommend Buy on Adani Energy Solutions Ltd. while valuing the businesses on SoTP-basis with target price of Rs 1,318 per share. The stock is trading at 12 times enterprise value/Ebitda which we believe is comfortable given the strong growth in operating profits.
Adani Energy Solutions is not only the second largest transmission player in the country with more than 40% market share in bids (Source: CEA) but also is the second largest player in smart meter bids.
Note that both the segments are seeing favorable tailwinds. As a result, we estimate Ebitda is set to rise from Rs 58 billion in FY24 to Rs 132 billion in FY27E.
The strong increase is on the back of-
Rs ~30 billion from new transmission bids,
+Rs ~40 billion from smart meter,
+ Rs ~5 billion from distribution areas.
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