Adani Power shares: Morgan Stanley initiates coverage, say this as stock surges 14%
Morgan Stanley has initiated coverage on Adani Power, recognising the company as a striking example of corporate turnaround in India,
- Sep 19, 2025,
- Updated Sep 19, 2025 2:33 PM IST
Morgan Stanley has initiated coverage on Adani Power Ltd (APL), recognising the company as a striking example of corporate turnaround in India, with favourable outcomes in regulatory matters and value-accretive acquisitions. The brokerage anticipates robust earnings growth facilitated by timely project completions and new power purchase agreements (PPAs) in the medium term, rating the company as 'Overweight' and designating it as a top pick in the sector.
According to Morgan Stanley, which is 'overweight' on the stick, said Adani Power's resolution of regulatory issues and value-accretive acquisitions have positioned it strongly in the market. The brokerage underscores APL's strong balance sheet and forecasts substantial expansion in the company’s capacity and market share in the coming years.
Morgan Stanley stated, "We forecast its market share to reach 15% by F32e with a 41.9GW portfolio (2.5x vs F25)." Adani Power currently holds an 8% share in both coal capacity and generation, ranking it as the country's largest independent and second-largest overall power producer after NTPC.
Shares of Adani Power surged nearly 14 per cent on Friday to it Rs 719, hitting a news 52-week high. Its market capitalization topped Rs 2.75 lakh crore mark. The stock has rallied 67 per cent from its 52-week low at Rs 430.85, hit in November 2024. The stock is up 365 per cent from its lows around Rs 155 in February 2023.
The energy market context is shaped by growing demand from sectors such as artificial intelligence, data centres, and urban mobility. The Indian government forecasts a 6% compound annual growth rate (CAGR) in electricity demand from FY22 to FY32, driven by increased appliance usage and rising manufacturing activity. Morgan Stanley notes, "We see upside potential to this forecast, as seen post Covid, i.e., in F22-Q1F25," and adds, "Hence, we believe coal holds the key to India's energy security, with nuclear being a driver in the next decade."
Adani Power’s capital expenditure plans are central to its growth strategy. The report states, "We expect 60-65% of its US$27bn capex for a 23.7GW addition to be met through internal accruals." Timely project deliveries, land acquisition, and efficient construction execution by the Adani Group are cited as critical factors supporting these ambitions. Morgan Stanley expects further earnings potential if the company’s merchant portfolio declines from its current level and profitability in recent acquisitions improves: "We see upside to our estimates if APL's merchant portfolio declines from 20% currently, and profitability in recently acquired 2.9GW power plants improves."
Looking ahead, Adani Power's EBITDA is forecast to reach Rs672bn by FY33, representing a 17% CAGR from FY22–33. The brokerage expects net debt to peak at Rs1.32trn by FY31, with net debt/EBITDA peaking at 3.2x by FY29, the overseas brokerage firm has noted.
Morgan Stanley’s price target of Rs 818, implies a price-to-book multiple of 3.6x for September 2027 estimates, compared to NTPC’s 1.8x. The brokerage justifies this valuation, stating, "We think this is reasonable, given APL's stronger EBITDA growth." The report notes that the successful execution of future projects and further regulatory clarity may support this valuation premium.
Morgan Stanley highlights potential risks such as weaker power demand, increased capex requirements, delays in plant commissioning, challenges in coal sourcing, and the financial health of distribution companies. The expansion of the sector is also influenced by the integration of renewables and the need for additional grid investment.
Morgan Stanley has initiated coverage on Adani Power Ltd (APL), recognising the company as a striking example of corporate turnaround in India, with favourable outcomes in regulatory matters and value-accretive acquisitions. The brokerage anticipates robust earnings growth facilitated by timely project completions and new power purchase agreements (PPAs) in the medium term, rating the company as 'Overweight' and designating it as a top pick in the sector.
According to Morgan Stanley, which is 'overweight' on the stick, said Adani Power's resolution of regulatory issues and value-accretive acquisitions have positioned it strongly in the market. The brokerage underscores APL's strong balance sheet and forecasts substantial expansion in the company’s capacity and market share in the coming years.
Morgan Stanley stated, "We forecast its market share to reach 15% by F32e with a 41.9GW portfolio (2.5x vs F25)." Adani Power currently holds an 8% share in both coal capacity and generation, ranking it as the country's largest independent and second-largest overall power producer after NTPC.
Shares of Adani Power surged nearly 14 per cent on Friday to it Rs 719, hitting a news 52-week high. Its market capitalization topped Rs 2.75 lakh crore mark. The stock has rallied 67 per cent from its 52-week low at Rs 430.85, hit in November 2024. The stock is up 365 per cent from its lows around Rs 155 in February 2023.
The energy market context is shaped by growing demand from sectors such as artificial intelligence, data centres, and urban mobility. The Indian government forecasts a 6% compound annual growth rate (CAGR) in electricity demand from FY22 to FY32, driven by increased appliance usage and rising manufacturing activity. Morgan Stanley notes, "We see upside potential to this forecast, as seen post Covid, i.e., in F22-Q1F25," and adds, "Hence, we believe coal holds the key to India's energy security, with nuclear being a driver in the next decade."
Adani Power’s capital expenditure plans are central to its growth strategy. The report states, "We expect 60-65% of its US$27bn capex for a 23.7GW addition to be met through internal accruals." Timely project deliveries, land acquisition, and efficient construction execution by the Adani Group are cited as critical factors supporting these ambitions. Morgan Stanley expects further earnings potential if the company’s merchant portfolio declines from its current level and profitability in recent acquisitions improves: "We see upside to our estimates if APL's merchant portfolio declines from 20% currently, and profitability in recently acquired 2.9GW power plants improves."
Looking ahead, Adani Power's EBITDA is forecast to reach Rs672bn by FY33, representing a 17% CAGR from FY22–33. The brokerage expects net debt to peak at Rs1.32trn by FY31, with net debt/EBITDA peaking at 3.2x by FY29, the overseas brokerage firm has noted.
Morgan Stanley’s price target of Rs 818, implies a price-to-book multiple of 3.6x for September 2027 estimates, compared to NTPC’s 1.8x. The brokerage justifies this valuation, stating, "We think this is reasonable, given APL's stronger EBITDA growth." The report notes that the successful execution of future projects and further regulatory clarity may support this valuation premium.
Morgan Stanley highlights potential risks such as weaker power demand, increased capex requirements, delays in plant commissioning, challenges in coal sourcing, and the financial health of distribution companies. The expansion of the sector is also influenced by the integration of renewables and the need for additional grid investment.