Global brokerage Jefferies has issued a 'Buy' rating for Adani Green Energy Ltd (AGEL) shares, forecasting a significant 35% potential upside. The firm set a target price of Rs 1,695 per share, citing multiple growth triggers despite recent market corrections.
According to Jefferies, AGEL's shares appear attractively valued at 20 times one-year forward Ebitda, following a 22% correction from their peak. The brokerage anticipates AGEL's Ebitda to grow at a compounded annual rate of 30% between fiscal years 2026 and 2030.
Key Growth Drivers Identified by Jefferies
The optimistic outlook is underpinned by several factors:
- Strong Power Demand: Jefferies highlighted strong industry power demand, potentially exacerbated by continued El-Nino conditions into 2027, leading to higher temperatures and increased electricity consumption.
- Improved Asset Utilization: Higher temperatures are expected to drive better utilization of AGEL's renewable energy assets. The Khavda project, in particular, is noted for its high solar irradiation (2,060 KWh/m2) and wind speed (8 meters per second), implying solar utilization potential of 33% and wind of 35%. Every 200 basis points improvement in solar utilization is projected to add 20% to profits.
- Robust Execution at Khavda: A recent visit to AGEL's Khavda site instilled confidence in the brokerage regarding the company's on-ground execution capabilities. Khavda is expected to contribute over 65% of AGEL's incremental capacity addition by FY30.
- Battery Energy Storage Solutions (BESS): AGEL is rapidly expanding its BESS segment, with an installed capacity of 6.6 GWh and plans to exceed 10 GWh by the end of FY27. This expansion is crucial given the strong power demand.
Jefferies noted that these positive factors should largely offset any potential concerns arising from higher interest costs due to Reserve Bank of India (RBI) rate hikes, thereby limiting the earnings drag.
Financial Strength and Future Outlook
The brokerage also pointed to improving financial metrics for Adani Green Energy. The company's net debt to Ebitda ratio is projected to fall from 8.9 times in FY26 to 7.1 times by FY30, based on an assumed capacity of 44 GW. Furthermore, the promoter group's substantial equity investment of Rs 9350 crore, with a significant portion already infused, reinforces confidence in the company's balance sheet.
AGEL's installed capacity is largely secured under long-term Power Purchase Agreements (PPAs), providing stable cash flow visibility and contributing to a stronger financial position.