New Delhi, Jan 17 Global brokerage Jefferies has maintained its 'buy' rating on the stock of Adani Energy Solutions, saying the company's growth story remains intact.
The brokerage has kept its target price for the stock at Rs 1,300, implying a 67 per cent upside.
“It is a 50 per cent premium to our implied 10 times target EV/EBITDA multiple for Power Grid given the much higher growth in Adani Energy as against Power Grid's 6-7 per cent profit after tax compounded annual growth rate in FY24-27,” said the brokerage.
Adani Energy Solutions, in its Q3 update, highlighted that it maintained robust system availability at 99.7 per cent.
“Company added 225 circuit kilometres (ckm) in its transmission network taking the total to 26,485 ckm. Two new projects have boosted the project pipeline to Rs 547 billion from Rs 170 billion at the start of FY25. Smart metering is a new high-growth area. Capital management program focus is on reducing volatility in interest costs through long-tenure bonds. Buy,” said Jefferies in its note.
The Adani Group company won two transmission bids in Q3, both in Rajasthan, related to the renewable energy park.
The company has a market share of 24 per cent in competitive bids, which is up from 17 per cent given the recent win.
“Management indicated a robust pipeline in near-term tendering at Rs 590 billion, up 55 per cent YoY on its recent Q2 call. We believe AESL should see 16 per cent revenue CAGR and 62 per cent PAT CAGR in FY24-27E, driven by locked-in growth in both transmission and distribution business,” said the brokerage.
Recently, Tamil Nadu scrapped an 8.2 million meter bid stating that while Adani Energy Solutions is the lowest bidder, they believe the bid price is fairly high.
“This does not impact AESL’s current under-execution projects as they are not a part of the 22.8 mn," the brokerage said. “In our view, the company is realising the business potential on both smart metering and distribution.”
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