Multibagger Adani group stock Adani Power has just bagged a 'Buy' call from brokerage Motilal Oswal Financial Services (MOFSL), which drove it 2 per cent higher on the bourses on Thursday. The stock rose to ₹211.35 on the BSE. Adani Power is India’s largest private thermal power producer with a capacity of ~18GW in Q1FY27, which accounted for 24 per cent of private and 8 per cent of aggregate coal and lignite-based capacity in India.
The brokerage assigned a target price of ₹250 to Adani Power shares, valuing the company at 16x FY29E Ebitda, investments add ₹1 per share. While the stock is valued at a substantial valuation premium over peers such as NTPC and JSW Energy, MOFSL said superior capital allocation and strong growth trajectory give it an edge.
3 reasons why MOFSL is bullish on Adani PowerMOFSL is bullish on the power sector company on the back of the following reasons: 1. Ambitious growth planIndia's substantial thermal capacity is set to rise by ~86GW over FY26-36, which could benefit Adani Power, which plans to raise its own capacity by 2.3x to 42GW by FY32.
"We see Adani Power as the natural winner of India's upcoming thermal capacity build-out and beneficiary of a benign competitive environment. "Limited competition in various upcoming bids (UP, Gujarat, Rajasthan, Uttarakhand, and Andhra Pradesh) augurs well for project economics and places Adani Power well to ride the next thermal capacity up-cycle," analysts at the brokerage firm said.
Moreover, the tariff differential that has underpinned solar's decade-long displacement of thermal generation is structurally compressing, and the brokerage said "this convergence shall fundamentally lead to improved competitive positioning of coal-based plants".
2. Solid execution track recordAcquiring distressed thermal assets at steep discounts to greenfield replacement cost, mainly via the Corporate Insolvency Resolution Process, has been a repeated capital-efficient growth lever for Adani group company. Raigarh, acquired in July 2019 with a negative Ebitda of ₹97 crore, delivered an Ebitda of ₹1100 crore in FY26.
Similarly, Mahan plant, acquired in March 2022, has nearly tripled Ebitda from the year of acquisition. Foray into nuclear powerNuclear power is an emerging optionality for Adani Power's long-term earnings growth. The company's plans to develop nuclear power projects depend on the government finalizing rules to allow private-sector participation.
The company has outlined a target of developing 10GW of nuclear capacity by 2035. MOFSL has built in an Ebitda CAGR of 21 per cent over FY26-29E, a PAT CAGR of 9 per cent over FY26-29E, and capacity additions of 1.3/1.6/3.2GW in FY27/FY28/FY29. Some of the key risks flagged by the brokerage are: 44 per cent of the upcoming thermal capacity is untied, leaving the company exposed to demand uncertainty; rising competition in the sector, a slowdown in tendering activity, APL has large capex commitments; delays or cost overruns can hurt its cash flows and returns; and strict adherence to environmental regulations, as failure could result in penalties and legal issues.