Adani Power's stock has upside potential of 54.5 pc in next 24 months: Ventura

New Delhi, Jan 24 Enhanced coal availability and business expansion are fuelling the growth of Adani Power Ltd, according to brokerage firm Ventura, which has given its stock a target price of Rs 806 in the next 24 months, which is a upside potential of 54.5 per cent.

The power demand in India is surging, driven by rising manufacturing activities and the growing adoption of white goods and gadgets in households.

With renewable energy unable to fully meet the rising energy needs, the widening peak demand-supply gap underscores the necessity of augmenting base load thermal power capacity, according to the note by Ventura.

Adani Power, India's largest private pure-play thermal power producer, is strategically positioned with robust capacity expansion plans to address this critical demand.

"We recommend BUY with an upward revised DCF-based price target of Rs 806 (13.8X FY27 EV/EBITDA), representing an upside of 54.5 per cent," the brokerage said.

The stock is currently trading at around Rs 522 apiece.

With an installed capacity of 17.55 GW, Adani Power Ltd (APL) is India's largest private coal-based thermal power producer. The company sources coal from both domestic and international markets.

Rising power demand supported by lower imported coal prices and improved domestic coal availability has substantially improved APL's average plant load factor (PLF), which has risen from 48 per cent in FY23 to 72 per cent in H1 FY25 - marking its highest level in seven years.

"This remarkable progress has exceeded our previous estimates and strengthened the company’s revenue performance and operational profitability," Ventura noted.

In FY24, APL achieved YoY growth in revenue and EBITDA of 29.9 per cent to Rs 50,351 crore and 81 per cent to Rs 18,181 crore, respectively. Similarly, in H1 FY25, revenue and EBITDA recorded a strong YoY growth rate of 17.9 per cent and 32.1 per cent, respectively.

Adani Power is committed to future growth through continued investments in thermal power capacity, targeting a total capacity of 30.67 GW by FY31. This is expected to increase the company’s share in India’s thermal power sector from 6 per cent in FY24 to 11 per cent by FY31.

As a result, over FY24-27E, APL's revenue and EBITDA are expected to grow at a Compound Annual Growth Rate (CAGR) of 11.8 per cent and 11 per cent, to reach Rs 70,284 crore and Rs 24,864 crore, respectively, according to the note.

"During H1 FY25, APL has showcased remarkable business performance, driven by its strong fundamentals and standalone operational capabilities," it added.