Ventura Securities said it is bullish on the Adani group stock, citing Adani Energy Solutions Ltd (formerly Adani Transmission Ltd), a leader in India's private power transmission industry with a 30% market share, as it proposed a two-year base target price of Rs 1,675 per share, hinting at 116.90% potential upside ahead. Ventura projected an upside of 149% for Adani Energy Solutions in its bull case scenario.
Its bull case is based on a valuation of 20 times EV/Ebitda, an EBITDA margin of 47%, and an annual sales of Rs 30,000 crore at a CAGR of 21.8% during FY24–27. Revenue of Rs 28,544 crore, an EBITDA margin of 45%, and a valuation of 19.6 times EV/EBITDA are all assumed in the base scenario. This scenario suggests a roughly 16% loss.
According to Ventura, Adani Energy Solutions is a major power distributor in Mumbai and Mundra and works in the power T&D sector, acquiring projects mostly through TBCB. Building, running, and maintaining power T&D networks under 35-year contracts is the company's primary business strategy. "AESL generates fixed tariff-based returns or RoA annually, ensuring a stable and predictable cash flow," it stated.
According to Ventura, Adani Energy Solutions is expanding into the smart meter market in order to spur expansion. The brokerage stated that Adani Energy Solutions showed resiliency, bolstered by strong fundamentals and operational strength, in spite of the market volatility that followed Hindenburg's new accusations in November 2024.
"Distribution business remains strong, delivering a 15 per cent RoA and backed by a capex plan exceeding Rs 10,000 crore over the next six years, which is expected to drive significant Ebitda growth," it stated.
In August 2024, AESL raised Rs 8,373 crore at a price of Rs 976 per share through QIP to finance its commercial expansion. It stated that both domestic and international investors showed a great deal of interest in Adani Group's maiden capital issue since the Hindenburg incident.
"AESL's revenue, EBITDA, and net profit are anticipated to increase at a compound annual growth rate (CAGR) of 19.8%, 31%, and 50.6% over FY24-27E, reaching Rs 28,544 crore, Rs 12,843 crore, and Rs 3,881 crore, respectively." According to Ventura, net margins and EBITDA are expected to grow by 675 basis points to 13.6% and 1,060 basis points to 45%, respectively.
