Adani Power shares tank 3%; ICICI Sec ups target price, sees 19% upside; here's why
Adani Power sold 24 BU of power in Q2, up 7 per cent YoY. The merchant realisation was down 9 per cent in the quarter YoY. It reported PLF of 63 per cent was down 410 basis points (bps) YoY.
- Oct 31, 2025,
- Updated Oct 31, 2025 12:29 PM IST
Shares of Adani Power Ltd fell 3 per cent in Friday's trade as the Adani group company reported 11 per cent drop in net profit at Rs 2,906.46 crore for the September quarter on a flattish sales at Rs 13,106.34 crore. The stock fell 3 per cent to hit a low of Rs 157.60. That said, ICICI Securities has upped its target price on the stock to Rs 187 from Rs 134, hinting at 19 per cent potential upside over the prevailing price. It called Q2FY26 result 'in line' and said operating parameters were stead.
PPAs tied up at attractive tariffs and the outlook on coal PPA remains strong, it said.
"Adani Power has increased its under construction capacity by 2 times (25GW vs earlier 12GW). It has tied up power purchase agreement of 11GW (including L1 in Assam of 2.4GW) at attractive tariffs. Further, it is ahead of its peers as it has already placed BTG orders for entire under construction portfolio. We expect a significant part of the remainder portfolio to be tied up under long-term PPA in next 12-18 months," ICICI Securities said.
During the quarter, Adani Power sold 24 BU of power, up 7 per cent YoY. The merchant realisation was down 9 per cent in the quarter YoY. It reported PLF of 63 per cent was down 410 basis points (bps) YoY.
"As a result, it reported revenue of Rs 134bn (+1% YoY), EBITDA at INR 50bn (-2% YoY) – in line with our estimates. We maintain BUY with a revised target of Rs 187 to account for increased pipeline and better pricing environment," ICICI Securities said.
Adani has set a target of 42GW by 2032 (earlier 31GW). With 11GW out of 23GW under construction capacity tied up, outlook for PPA tie up for remainder of capacity remains strong given the 20GW of bidding pipeline across the states, ICICI Securities said.
ICICI Securities noted that India continues to witness robust growth in power demand, with both base and peak demand expected to expand by around 6 per cent annually over the next few years. Given limited capacity addition in the past five years, the country is likely to depend on thermal generation to meet rising peak requirements. As the largest private thermal power producer, Adani Power is expected to play a key role in this expansion, te brokerage said.
The brokerage highlighted that Adani Power has resolved key disputes, deleveraged its balance sheet, and enhanced profitability across operating assets. The company is leveraging its strengthened financial position to acquire assets at attractive valuations while adding new capacity to cater to the renewed demand for coal-based power. With its early-mover advantage in new project execution, the company is successfully securing long-term power purchase agreements (PPAs) for existing assets at favourable tariffs.
ICICI Securities has revised its FY26 earnings estimates for Adani Power to reflect softer power demand and lower merchant realisations in H1FY26, which accounted for 24 per cent of sales, along with lower plant load factors (PLFs). However, its long-term outlook for the company remains positive.
The brokerage has raised its valuation multiple, citing (1) 8 GW of capacity tied up under PPAs at attractive tariffs during Q2 and (2) a robust pipeline of new PPA opportunities with state discoms.
Shares of Adani Power Ltd fell 3 per cent in Friday's trade as the Adani group company reported 11 per cent drop in net profit at Rs 2,906.46 crore for the September quarter on a flattish sales at Rs 13,106.34 crore. The stock fell 3 per cent to hit a low of Rs 157.60. That said, ICICI Securities has upped its target price on the stock to Rs 187 from Rs 134, hinting at 19 per cent potential upside over the prevailing price. It called Q2FY26 result 'in line' and said operating parameters were stead.
PPAs tied up at attractive tariffs and the outlook on coal PPA remains strong, it said.
"Adani Power has increased its under construction capacity by 2 times (25GW vs earlier 12GW). It has tied up power purchase agreement of 11GW (including L1 in Assam of 2.4GW) at attractive tariffs. Further, it is ahead of its peers as it has already placed BTG orders for entire under construction portfolio. We expect a significant part of the remainder portfolio to be tied up under long-term PPA in next 12-18 months," ICICI Securities said.
During the quarter, Adani Power sold 24 BU of power, up 7 per cent YoY. The merchant realisation was down 9 per cent in the quarter YoY. It reported PLF of 63 per cent was down 410 basis points (bps) YoY.
"As a result, it reported revenue of Rs 134bn (+1% YoY), EBITDA at INR 50bn (-2% YoY) – in line with our estimates. We maintain BUY with a revised target of Rs 187 to account for increased pipeline and better pricing environment," ICICI Securities said.
Adani has set a target of 42GW by 2032 (earlier 31GW). With 11GW out of 23GW under construction capacity tied up, outlook for PPA tie up for remainder of capacity remains strong given the 20GW of bidding pipeline across the states, ICICI Securities said.
ICICI Securities noted that India continues to witness robust growth in power demand, with both base and peak demand expected to expand by around 6 per cent annually over the next few years. Given limited capacity addition in the past five years, the country is likely to depend on thermal generation to meet rising peak requirements. As the largest private thermal power producer, Adani Power is expected to play a key role in this expansion, te brokerage said.
The brokerage highlighted that Adani Power has resolved key disputes, deleveraged its balance sheet, and enhanced profitability across operating assets. The company is leveraging its strengthened financial position to acquire assets at attractive valuations while adding new capacity to cater to the renewed demand for coal-based power. With its early-mover advantage in new project execution, the company is successfully securing long-term power purchase agreements (PPAs) for existing assets at favourable tariffs.
ICICI Securities has revised its FY26 earnings estimates for Adani Power to reflect softer power demand and lower merchant realisations in H1FY26, which accounted for 24 per cent of sales, along with lower plant load factors (PLFs). However, its long-term outlook for the company remains positive.
The brokerage has raised its valuation multiple, citing (1) 8 GW of capacity tied up under PPAs at attractive tariffs during Q2 and (2) a robust pipeline of new PPA opportunities with state discoms.