The first-ever coverage initiation on Adani Green Energy sees 105% upside in 2 years


NEW DELHI: Adani Green Energy is the 21st most valuable company in India, ahead of giants like ONGC, Titan and Tata Motors. However, it had no analyst coverage until recently.

Ventura Securities said it has initiated coverage on

with a buy rating and a two-year target price at Rs 2,810. That means a potential upside of 105 per cent from current prices. The stock had delivered 3,030 per cent returns in the last three years.

The company has been on the bourses for over three years now, but the logic-defying bull run in the stock kept analysts away from it. No one could explain the reasons behind it, let alone set a price target.

Adani Green Energy is one of the largest renewable companies in India, with a current project portfolio of 13,990 MW and 20,284 MW of locked-in growth from under-construction assets. The company has aspirations to up its installed capacity to 25 GW by 2025 and 45 GW by 2030.

“With India’s stated intent of procuring 450 GW from renewable energy by 2030, Adani Green Energy is well placed to benefit from this megatrend. Currently, the company has a 5.3% share in India’s renewable installed capacity, which is set to grow to 10% by 2030,” analysts at Ventura Securities said.

The broker used the DCF model to value Adani Green Energy as its deals leave it with a visible cash flow in future. It has modelled 25 GW of capacity by FY25 and over the period FY25-FY55, has conservatively modelled 1,000 MW per annum.

“We have discounted back the future cash flows to FY24,” said Ventura Securities, adding that it has built-in conservative assumptions with regards to cash up-front and margin.

The broker argued that India, in its bid to achieve net zero emissions by 2070, would have to rely heavily on renewable energy and enhance its total capacity 14.5 times to 5,630 GW. “As demonstrated across all business units of Adani Group, they intend to achieve significant scale and size and, hence, our 1,000 MW per annum capacity addition after 2025 is an extremely conservative estimate,” it added.

Marquee global investors have subscribed to its investment grade long-term green bonds and a consortium of 18 international bankers provide for construction finance on revolving credit. Ventura said it sees this as a testimony of Adani Green’s strengths in attracting global capital, vital for sustaining the blitzkrieg pace of growth.

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