Shares of Adani Power could see substantial gains, with select brokerages predicting an upside of up to 38 percent. This optimistic outlook follows the company's second-quarter financial results for FY27 and its aggressive capacity expansion strategy.
JM Financial Maintains 'Buy' Rating
JM Financial has reiterated its 'Buy' recommendation for Adani Power, raising its target price to Rs 258 from an earlier Rs 255. This revised 12-month target implies a significant 38 percent upside potential from the brokerage's assessed market price of Rs 187. The brokerage highlights several key drivers for its positive stance.
JM Financial anticipates the commissioning of two 660 MW units at Korba-II in Q3 FY27 and Q4 FY27, respectively. Following this, the 1,600 MW Mahan-II project is slated for FY28, with an additional 3,600 MW capacity expected by FY29. These additions are noted for their faster-than-industry-average commissioning timelines, typically around four years compared to the industry's five to six years.
The brokerage also points to an increasing power deficit, particularly during evening hours, which stood at 5.1 GW in 2024, 4.1 GW in 2025, and an anticipated 7.7 GW in 2026. Adani Power's strong financial profile, with an expected net debt-to-EBITDA ratio of 2.5-3 times during FY26-FY29, further supports the positive outlook.
Elara Securities Also Sees Growth Potential
Elara Securities has maintained its 'Accumulate' rating on Adani Power, setting a target price of Rs 220, which suggests an 18 percent upside. The firm emphasizes the company's strong earnings visibility, underpinned by its 24 GW locked-in capacity expansion, growing power purchase agreement (PPA) coverage, and potential gains from merchant power sales.
While Elara Securities has slightly adjusted its earnings estimates for FY27 to account for minor delays in capacity additions, it believes that a substantial portion of the company's medium-term growth opportunities is already reflected in the current valuation.
Q2 FY27 Financial Performance Highlights
For the September quarter (Q2 FY27), Adani Power reported an adjusted revenue of Rs 16,500 crore, marking a 29 percent year-on-year increase. Sequentially, revenue was marginally lower by one percent. The company's units sold rose by 11 percent year-on-year to 26.4 billion units (BU), benefiting from an improved plant load factor (PLF) of 70 percent, up from 62.8 percent in Q2 FY26.
Average realisations for power purchase agreements (PPA) stood at Rs 6.4 per unit, a 13 percent year-on-year increase, while merchant power realisations climbed 33 percent year-on-year to Rs 7.2 per unit. However, the EBITDA margin for the quarter came in at 32 percent, a decrease of 305 basis points year-on-year and 228 basis points sequentially. JM Financial attributed this margin contraction primarily to a 50 percent increase in the landed cost of imported coal.