Target: ₹220
CMP: ₹189
Thermal power – backbone of reliable baseload supply: Thermal generation remains the backbone of India’s power system, providing reliable, dispatchable baseload capacity that helps offset renewables intermittency and maintain grid stability. While renewable energy penetration is rising, its weather dependence and variable output require complementary investments in battery energy storage systems (BESS) and pumped storage.
Adani Power is India’s largest private thermal power generator, with operating capacity of 18.3 GW across 13 assets, predominantly comprising high-efficiency supercritical and ultra-supercritical thermal plants. The company is pursuing one of the sector’s largest capacity expansion programmes, with 24 GW of locked-in capacity that would increase its targeted portfolio to 42 GW. Around 60 per cent of the pipeline is Brownfield, supporting faster execution and lower project cost.
We initiate on Adani with an Accumulate rating and a TP of ₹220 based on 12x FY29E EV/EBITDA. The company offers strong earnings visibility, supported by its 24 GW locked-in capacity expansion, rising PPA coverage, and upside from merchant power. However, the stock has already rallied 27 per cent y-o-y in the past year, outperforming the BSE Utilities Index. We believe a significant portion of the company’s medium-term growth opportunity is already reflected in the current valuation.