Emkay Global Financial Services has initiated coverage on Adani Green Energy Ltd. with a “buy” rating and a target price of Rs 2,550, implying an upside of over 43% from the previous closing price. The brokerage expects the company’s operating profit and adjusted net profit to grow at a compounded annual growth rate (CAGR) of 38% and 61%, respectively, during FY24-30.Adani Green Energy Secures High-Yield Sites for Solar-Wind Development
Adani Green Energy has secured sites for over 50 gigawatts of solar-wind development in Gujarat and Rajasthan, which have the highest global resource yield. This concentrated development is expected to improve the company’s capacity utilization factor, driving power sales growth at a 35% CAGR over fiscal 2024-2030.
Market Share and Capacity to Grow
The company’s renewable energy capacity has grown at a 41% CAGR over the last five years. Emkay expects capacity to grow at a 30% CAGR over fiscal 2024-2030, with Adani Green Energy’s market share in the plain vanilla renewable energy sector increasing to 15% by fiscal 2030 from 8% as of fiscal 2024.
Improving Leverage Ratios
Emkay expects Adani Green Energy’s leverage ratios to improve despite heavy capex plans, with the net debt to Ebitda ratio reducing from 7.4 times currently to 3.6 times by fiscal 2030. The company has a diversified funding source and access to cheaper long-term global bond markets, ensuring future growth through internal accruals.
