After Adani Energy Solutions released its third-quarter update, Jefferies has maintained its ‘buy’ rating on the stock as it sees the company’s growth story remaining intact given its transmission network, project pipeline and its capital management program.
The company maintained robust system availability at 99.7% and has added 225 circuit km in its transmission network, taking the total to 26,485 circuit km, Jefferies noted. “Two new projects have boosted the project pipeline to Rs 54,700 crore from Rs 17,000 crore at the start of FY25,” it said adding that smart metering is a new high-growth area. “Capital management program focus is on reducing volatility in interest costs through long-tenure bonds.”
The brokerage has kept its target price for the stock at Rs 1,300, implying 67% upside. “It is a 50% premium to our implied 10 times target EV/EBITDA multiple for Power Grid given the much higher growth in Adani Energy as against Power Grid’s 6-7% profit after tax compounded annual growth rate in FY24-27.”
Upside catalysts, according to the brokerage, is vendor arrangements to limit commodity price change impact, while on the downside, inability to maintain interest rate, losing market share to competitors will pose a risk to the stock.
Recently, Tamil Nadu scrapped a 8.2 million meter bid stating that while Adani Energy Solutions is the lowest bidder, they believe the bid price is fairly high. “This does not impact AESL’s current under execution projects as they are not a part of the 22.8 mn,” the brokerage said. “In our view, the company is realising the business potential on both smart metering and distribution.”
. Read more on Markets by NDTV Profit.The brokerage has kept its target price for the stock at Rs 1,300, implying 67% upside. Read MoreMarkets, Business
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