Adani Power share price jumped over 4% on Wednesday, extending its gains for the third consecutive session. Adani Power shares rallied as much as 4.66% to ₹506.10 apiece on the BSE.
While the Adani group stock has taken a significant beating in the past six months, ICICI Securities believes Adani Power shares have more upside potential of 24%.
ICICI Securities has resumed its coverage in Adani Power shares with a ‘Buy’ rating. It has Adani Power share price target of ₹600 apiece, implying an upside potential of 24% from Tuesday’s closing price.
“Adani Power has emerged unscathed after prolonged disputes relating to its existing power purchase agreements (PPAs) for operating assets. It has resolved the issues with the culmination of legal cases in favour of Adani, renegotiation of a few (PPAs) to reduce the fuel risk, and tying up with cheap coal under bids at attractive prices,” ICICI Securities said.
Strong Balance Sheet
According to the brokerage firm, Adani Power’s balance sheet has strengthened via infusion of promoter funds and debt reduction. Excess cash generated was utilised to repay external debt.
The healthy balance sheet is being utilised to pursue growth through organic and inorganic expansion.
“Adani has acquired stressed coal-based power plants at attractive valuations. It turned around the fortunes of these power plants with the help of demand-supply mismatch, hence, leading to higher merchant prices. Adani has further ordered 11GW of new coal-based power plants to coal equipment vendor,” ICICI Securities said in a report.
Tie-ups
The spread on merchant prices has considerably improved owing to demand-supply mismatch especially during peak hours. Adani is looking to tie up its new capacities under long-term PPAs. It has tied up PPAs for ~3GW at attractive tariffs.
The brokerage firm expects states to come up with new tenders in FY26 for long-term power procurement.
“With legacy issues related to PPAs resolved, Adani Power is stepping on the new builds. We believe this may create shareholder value in the medium term. We resume coverage on the stock with BUY and DCF-based target price of ₹600 per share,” ICICI Securities said.
At 12:15 PM, Adani Power shares were trading 4.02% higher at ₹503.00 apiece on the BSE.
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