Domestic brokerage firm JM Financial has initiated coverage on Adani Green Energy with a strongly bullish outlook, setting a target price of ₹1,289 per share that represents a potential 19% upside from the previous closing price of ₹1,088.
Three Pillars of Bullish Outlook
JM Financial highlighted three critical factors driving its optimistic stance on Adani Green Energy. The brokerage emphasized the company's proven execution capabilities and the significant advantages derived from group-level synergies across the Adani Group's extensive infrastructure network.
The firm has demonstrated remarkable growth by adding nearly 14 GW of capacity over the past decade, effectively leveraging the Adani Group's transmission, distribution, and infrastructure businesses. This strategic advantage positions Adani Green uniquely in the renewable energy landscape.
Strong Foundation and Assets
Adani Green has secured an impressive over 2.5 lakh acres of high-quality renewable energy sites across India, providing substantial growth runway. The company's operational assets have consistently met or exceeded P-90 performance benchmarks for four consecutive years, demonstrating reliable operations.
About 81% of the 16.8 GW operational portfolio is backed by 25-year Power Purchase Agreements, ensuring stable and predictable long-term cash flows. This revenue stability provides a solid foundation for future expansion and investment.
Achievable Growth Targets
JM Financial considers Adani Green's ambitious target of achieving 50 GW of installed renewable and storage capacity by FY30 as realistic and achievable. This confidence stems from the company's demonstrated pace of expansion and clear strategic direction.
The brokerage noted the company plans to rebalance its portfolio mix from the current 81%/19% ratio of long-term PPAs to merchant power to 75%/25% by 2030. This strategic shift is expected to strengthen the company's EBITDA profile and enhance profitability.
Adani Green is also expanding into the Commercial and Industrial segment, having secured its first significant agreement to supply 61 MW of renewable energy to power Google's data center, marking an important diversification milestone.
Financial Momentum and Performance
JM Financial highlighted the company's robust financial performance, with revenue growing at a 3-year CAGR of 30% to reach ₹112.1 billion in FY25. Equally impressive is the improvement in EBITDA margins, which expanded from 69% in FY22 to 79% in FY25.
The combination of strong internal accruals and a USD 1.1 billion promoter warrant infusion has ensured adequate equity for expansion while helping moderate the net debt-to-EBITDA ratio from 10.1x in FY20 to 6.4x in FY25.
Looking forward, JM Financial estimates that Adani Green will deliver impressive growth with CAGR of 29% in revenue, 32% in EBITDA, and 41% in PAT over FY25–28. This projection is supported by stable EBITDA per MW at ₹7–8 million and further improvement in net debt-to-EBITDA to 5.3x by FY28.
Valuation and Investment Rationale
Based on Adani Green's proven execution capabilities and strong group synergies, JM Financial values the stock at 14x FY28 EV/EBITDA, applying this multiple to the run-rate EBITDA for 28 GW capacity. This valuation methodology underpins the target price of ₹1,289 per share.
The brokerage's analysis suggests that Adani Green Energy is well-positioned to capitalize on India's growing renewable energy demand while maintaining its leadership position in the sector through strategic expansion and operational excellence.
