Adani Power shares rise 7%, brokers see profits rising over several years. Should you buy or sell?

Shares of Adani Power rose as much as 7.1% to rise to Rs 153.20 on the BSE on Thursday as investors assessed the company’s long-term growth prospects amid expectations of rising demand for baseload power, a pipeline for major capacity expansion and improving earnings visibility, as highlighted in recent brokerage reports.In a recent introductory note, Antique Stock Broking said Adani Power was entering a “multi-year earnings cycle”, supported by a planned 2.3x capacity expansion from 18.15 GW in FY25 to 41.9 GW in FY33E and a transition from a stressed thermal independent power producer to what it described as India’s most efficient private baseload operator.

Antique pointed to the structural increase in energy demand in India, supported by an estimated 6% CAGR during 22-32E, driven by electric vehicles, data centers, artificial intelligence workloads and manufacturing growth. The brokerage said this environment continues to support the role of coal-based generation in meeting peak and non-solar demand.PPAs enhance visibility of revenue and cash flow

Antique said Adani Power has secured a 70% share of the ongoing state-led thermal PPA awards, winning 12.4 GW of the 17.7 GW awarded so far, reflecting what it described as the company’s cost and execution advantages. It added that 90% of operating capacity and 67% of the 41.9 GW portfolio are already committed under long-term PPAs or letters of intent.

The brokerage said new PPAs carry higher fixed costs than existing contracts, improving fixed cost recovery and predictability of profits. Fuel security is supported by SHAKTI-linked fuel supply agreements, while indigenous coal production is expected to support some trading capacity.

Morgan Stanley increases forecasts and reduces exposure to sellers. Morgan Stanley said separately that Adani Power has won PPAs and letters of award for about 6.7 GW in the past three months, bringing its PPA bid pipeline to about 22 GW. The broker said it had lowered its trading capacity exposure estimate, reflecting stronger earnings visibility.

“Earnings visibility remains strong,” said Morgan Stanley, which reiterated its Overweight rating and forecast a 20% EBITDA CAGR for FY25-33, higher than its previous estimate.

Morgan Stanley raised its price target on the stock to Rs 185 from Rs 163.6, citing higher earnings expectations following recent PPAs and operating performance, while keeping the valuation methodology unchanged.

Expansion and balance support the outlook

Antique said Adani Power is undertaking the largest private sector thermal expansion in India, with 23.72 GW under construction, taking its total capacity to 41.9 GW by FY33E. The brokerage emphasized a brownfield-led expansion strategy that lowers capital intensity and execution timelines compared to public sector peers.

It added that around 60% of the company’s Rs 2 trillion investment pipeline is expected to be funded through internal provisioning, supporting deleveraging, with net debt to EBITDA expected to fall below 1x in FY32E.

Both brokers said coal-fired generation is expected to remain critical to the stability of India’s power grid and reliability during peak hours over the next decade, making Adani Power a key beneficiary of the tightening of baseload requirements.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)