Multibagger stock? Adani Energy Solutions shares may rally 149% in bull case, says Ventura

Calling Adani Energy Solutions Ltd (erstwhile Adani Transmission Ltd) a frontrunner in India’s private power transmission sector with a 30 per cent market share, Ventura Securities said it is bullish on the Adani group stock, as it suggested a two-year base target price of Rs 1,675 apiece, which hints at 116.90 per cent potential upside ahead. In its bull case scenario, Ventura suggested a 149 per cent upside for Adani Energy Solutions.

Its bull case assumes an annual revenue of Rs 30,000 crore at CAGR of 21.8 per cent over FY24-27, Ebitda margin of 47 per cent and valuation of 20 times EV/Ebitda. The base case assumes revenue of Rs 28,544 crore, Ebitda margin of 45 per cent and valuation of 19.6 times EV/Ebitda. It in fact has a bear case target of Rs 649, assuming revenue of Rs 20,000 crore at CAGR of 6.4 per cent, Ebitda margin of 40 per cent and valuation of 15 times EV/Ebitda. This scenario hints at about 16 per cent downside.
 
Ventura said Adani Energy Solutions operates in the power T&D space, acquiring projects primarily through TBCB and is a key distributor of power in Mumbai & Mundra. The company's business model focuses on developing, operating, and maintaining power T&D networks under 35-year contracts. "AESL generates fixed tariff-based returns or RoA annually, ensuring a stable and predictable cash flow," it said.

Ventura said Adani Energy Solutions is diversifying into the smart meter segment to drive growth. Despite the stock volatility following Hindenburg’s fresh allegations in November 2024, Adani Energy Solutions demonstrated resilience, supported by robust fundamentals and operational strength, the brokerage said.

"Distribution business remains strong, delivering a 15 per cent RoA and backed by a capex plan exceeding Rs 10,000 crore over the next six years, which is expected to drive significant Ebitda growth," it said.

To fund its business expansion, AESL raised Rs 8,373 crore via QIP in August 2024 at Rs 976 per share. It noted that Adani Group’s first capital raise post-Hindenburg episode attracted strong interest from global and domestic investors. 

"Over FY24-27E, AESL’s revenue, Ebitda , and net profit are expected to grow at a CAGR of 19.8 per cent, 31 per cent, and 50.6 per cent, reaching Rs 28,544 crore, Rs 12,843 crore, and Rs 3,881 crore, respectively. Ebitda and net margins are projected to expand by 1,060 bps to 45 per cent and 675 bps to 13.6 per cent," Ventura said.