Adani Energy Solutions share price gains over 2%; Analysts see up to 37% upside in the Adani Group stock

Adani Energy Solutions share price gained more than 2% on Friday, continuing their upward momentum amid strong buying interest. The Adani Group stock surged as much as 2.7% to ₹696 apiece on the BSE.

However, despite this short-term rise, Adani Energy shares have witnessed a steep correction in recent years. The stock has plummeted nearly 50% from its 52-week high and is down 84% from its all-time peak.

Over the past one month, Adani Energy shares have declined by 16%, while in the last six months, they have dropped over 37%. In the past year, the stock has lost 36%, and in the last three years, it has tumbled 64%.

Despite the sharp correction, analysts remain optimistic about the stock’s long-term prospects. Brokerage firm Elara Capital has initiated coverage on Adani Energy Solutions with a ‘Buy’ rating and a target price of ₹930, indicating a potential upside of nearly 37% from Thursday’s closing price.

Fundamental Strength

Elara Capital’s bullish outlook on Adani Energy Solutions shares is based on the company’s strong fundamentals and expected growth in key segments. The brokerage values Adani Energy Solutions’ regulated transmission assets at 2.5x FY27E P/BV and transmission projects at 14.0x FY27E EV/EBITDA.

One of the major growth drivers for the Gautam Adani-led group’s Adani Energy Solutions is its transmission business, which is expected to double its EBITDA in the next three years.

The Indian government’s push towards achieving 500GW of renewable energy capacity requires a robust transmission network, leading to a surge in bidding activity. The Adani Group company has transmission projects worth ₹54,800 crore scheduled for completion within 18-24 months, with additional projects worth ₹38,800 crore secured recently.

“These new projects are likely to generate incremental EBITDA of ₹7,000 crore, effectively doubling EBITDA from the current ₹4,000 crore to around ₹7,600 crore by FY27E,” Elara Capital said in a report.

The company is also expanding in the distribution business, particularly in the Mundra SEZ, where power demand is expected to rise from 50 MW to 5 GW. Additionally, Adani Energy Solutions has emerged as a key player in India’s smart meter initiative, securing an order book of 23 million meters as on FY25YTD.

“The installation of each meter needs an upfront capital investment of ₹5,800. During the 90-month agreement term, the company is likely to generate revenue of ₹12,000 per meter. The company is set to sustain an EBITDA margin of 85% in this vertical,” Elara Capital said.

Technical Outlook: Signs of a Breakout?

From a technical perspective, Adani Energy Solutions stock appears to be setting up for a breakout.

“A high-volume reversal candle was formed with a high and low of ₹869 and ₹588, respectively. Since then, the Adani Group stock has been consolidating within this range, with diminishing volumes — often a bullish signal. Key anchored VWAPs and the 10, 20, and 50-day moving averages lie between ₹737 -7 95. A breakout above ₹795 could trigger strong bullish momentum,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

He suggests traders may consider a preemptive long position at the current market price of ₹679, targeting ₹795 and beyond, as the stock gears up for a potential bullish trajectory.

At 1:25 PM, Adani Energy Solutions shares were trading 0.35% higher at ₹680.15 apiece on the BSE, commanding a market capitalisation of over ₹81,705 crore. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.