Adani Power (APL) is positioned to expand its thermal power generation capacity in India from 17.6 GW to 30.7 GW by 2030, making it the country’s second-largest thermal power producer after NTPC. The company has already made significant progress in securing the necessary land and financing for this ambitious growth plan. By closely working with BHEL for equipment delivery and utilizing in-house EPC capabilities, APL is on track to meet its capex targets on time.
Currently, APL operates 12 power plants across eight states, with the majority of its capacity tied up through Power Purchase Agreements (PPAs). Additionally, the company has strategically located 98% of its open capacity near coal mines, which enables cost-effective sourcing of coal. While some of its coastal plants rely on imported coal, they have fuel cost pass-through mechanisms in place.
Despite the overall peak deficit scenario in the power sector, APL’s merchant capacity is expected to increase to 12-13% by FY30E, with a projected EBITDA contribution of 19-20%. We anticipate a slight decline in average merchant realizations per unit in FY24, but every 5% increase in merchant realizations could lead to a 2% rise in EBITDA by FY27.
With a strong project pipeline, a sizable land bank, and ongoing equipment awards, APL is well-positioned to achieve its 30 GW capacity target by 2030. We forecast a 14% EBITDA CAGR from FY24 to FY30, primarily driven by new capacity additions.
Initiating coverage, we rate APL as a Buy with a target price of ₹660.
