Adani Power target: Why InCred Equities sees 18% upside on this Adani stock
Currently, 87 per cent of Adani Power’s capacity is secured through long-term Power Purchase Agreements (PPAs) that include a fuel cost pass-through clause, ensuring earnings stability.
- May 29, 2025,
- Updated May 29, 2025 11:11 AM IST
InCred Equities has initiated coverage on Adani Power with an ‘Add’ rating and a target price of Rs 649 per share. The company, a leading pure-play thermal power producer, has already received four ‘Buy’ ratings from various brokerages.
In its report, InCred highlighted Adani Power’s ambitious growth strategy, which includes a planned 75 per cent increase in power generation capacity to 30.67GW by FY30. This expansion aligns with India’s expected power demand growth of 5-6 per cent annually, targeting a projected peak demand of 458GW by FY32.
Currently, 87 per cent of Adani Power’s capacity is secured through long-term Power Purchase Agreements (PPAs) that include a fuel cost pass-through clause, ensuring earnings stability. This setup is expected to generate a recurring EBITDA of Rs 20,000 crore in FY25.
In addition, 17 per cent of the company’s power sales come from the merchant market, allowing it to tap into high-margin opportunities, the report added.
InCred emphasized Adani Power’s turnaround story, overcoming significant past hurdles including a Rs 2,093 crore net loss in FY18 and a debt burden of Rs 49,100 crore (8.9x debt-to-equity ratio). The company has since benefited from regulatory wins, such as the Supreme Court’s approval of compensatory tariffs for its Mundra plant, and improved operational efficiency, reflected in a Plant Load Factor (PLF) of 71 per cent and projected revenue of Rs 56,400 crore in FY25.
Adani Power’s expertise in reviving stressed assets has been a key strength. For instance, post-acquisition, Mahan Energen’s EBITDA has tripled, and recent acquisitions—1,200MW Mutiara and 600MW Korba plants—further reinforce its portfolio. These turnarounds typically occur within 18–24 months at a relatively low acquisition cost.
InCred has valued Adani Power at 11x one-year forward EV/EBITDA, citing a target price of Rs 649. The valuation is underpinned by a 9 per cent PAT CAGR and a sustained Return on Equity (RoE) above 15 per cent.
InCred also highlighted that Adani Power’s growth plans place it ahead of peers like NTPC and JSW Energy, ensuring execution certainty with 11.2GW of equipment already ordered from BHEL. Additionally, the acquisition of four coal mines with a combined capacity of 14 MTPA provides fuel security for 3GW of merchant capacity, enhancing both operational and cost efficiency.
However, the report notes a few downside risks, including delays in executing the 13.12GW capacity pipeline, lower-than-expected merchant market realizations and a possible resurgence of payment issues from discoms.
InCred Equities has initiated coverage on Adani Power with an ‘Add’ rating and a target price of Rs 649 per share. The company, a leading pure-play thermal power producer, has already received four ‘Buy’ ratings from various brokerages.
In its report, InCred highlighted Adani Power’s ambitious growth strategy, which includes a planned 75 per cent increase in power generation capacity to 30.67GW by FY30. This expansion aligns with India’s expected power demand growth of 5-6 per cent annually, targeting a projected peak demand of 458GW by FY32.
Currently, 87 per cent of Adani Power’s capacity is secured through long-term Power Purchase Agreements (PPAs) that include a fuel cost pass-through clause, ensuring earnings stability. This setup is expected to generate a recurring EBITDA of Rs 20,000 crore in FY25.
In addition, 17 per cent of the company’s power sales come from the merchant market, allowing it to tap into high-margin opportunities, the report added.
InCred emphasized Adani Power’s turnaround story, overcoming significant past hurdles including a Rs 2,093 crore net loss in FY18 and a debt burden of Rs 49,100 crore (8.9x debt-to-equity ratio). The company has since benefited from regulatory wins, such as the Supreme Court’s approval of compensatory tariffs for its Mundra plant, and improved operational efficiency, reflected in a Plant Load Factor (PLF) of 71 per cent and projected revenue of Rs 56,400 crore in FY25.
Adani Power’s expertise in reviving stressed assets has been a key strength. For instance, post-acquisition, Mahan Energen’s EBITDA has tripled, and recent acquisitions—1,200MW Mutiara and 600MW Korba plants—further reinforce its portfolio. These turnarounds typically occur within 18–24 months at a relatively low acquisition cost.
InCred has valued Adani Power at 11x one-year forward EV/EBITDA, citing a target price of Rs 649. The valuation is underpinned by a 9 per cent PAT CAGR and a sustained Return on Equity (RoE) above 15 per cent.
InCred also highlighted that Adani Power’s growth plans place it ahead of peers like NTPC and JSW Energy, ensuring execution certainty with 11.2GW of equipment already ordered from BHEL. Additionally, the acquisition of four coal mines with a combined capacity of 14 MTPA provides fuel security for 3GW of merchant capacity, enhancing both operational and cost efficiency.
However, the report notes a few downside risks, including delays in executing the 13.12GW capacity pipeline, lower-than-expected merchant market realizations and a possible resurgence of payment issues from discoms.