Adani Power has successfully navigated through prolonged disputes related to its power purchase agreements (PPAs) for operating assets. The company has resolved issues through legal proceedings in its favor, renegotiated certain PPAs to reduce fuel risks, and secured cheap coal through competitive bids. Adani has also received compensation for past supplies and secured higher tariffs in existing PPAs.
The company’s balance sheet has significantly improved with a capital infusion from promoters and debt reduction. Excess cash generated has been utilized to repay external debt, resulting in a strong balance sheet that is being leveraged for organic and inorganic growth. Adani has seen improved margins on merchant prices due to a demand-supply mismatch, especially during peak hours. The company is actively securing long-term PPAs for its new capacities, with approximately 3 GW already tied up at attractive tariffs.
As India faces a growing demand-supply gap for base load power, Adani is well-positioned with an untied portfolio and new capacities under construction. With new tenders expected for long-term power procurement in FY26, Adani is ahead of the competition.
Trading at 12.2x FY27E earnings, we recommend a Buy rating on Adani Power with a Target Price of ₹600 based on DCF valuation methodology.
