We are commencing coverage of Adani Power Ltd (APL) with an Overweight rating and a price target of ₹595. APL operates 11 thermal power plants and one solar power plant in India, with a total effective capacity of around 17.5 GW. It is the largest privately-owned thermal power generator in India and the first to utilize advanced supercritical technology.
What sets APL apart is its growth potential (expected to add 12.5 GW of capacity over the next five years), strong balance sheet (lowest leverage in several years), and our belief that India will continue to heavily rely on thermal power as the economy expands. Given its reasonable valuation, we find the risk/reward proposition appealing at current levels.
Based on our FY26 continuing EBITDA estimates, APL is currently trading at a multiple of 10.9x. This compares favorably to US peers at 11.6x, European peers at 7.2x, and Indian peers at 11.9x. With one of the strongest balance sheets in the industry and an unmatched growth trajectory, we believe APL warrants a valuation in line with or at a premium to its Indian peer group. Our price target of ₹595 is based on a 12.5x EV/EBITDA multiple, implying a slight premium.
We consider the risk/reward profile for APL to be attractive at current levels. With its robust balance sheet and unparalleled growth prospects, we believe that APL’s shares deserve to trade at least in line with its Indian peers, if not at a premium. Our price target reflects this optimism and our belief in APL’s potential for future growth.
