Why Are Global Brokerages Optimistic About Adani Power After Q2 Performance?
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Synopsis
Global brokerage firms are optimistic about Adani Power's recent performance, raising price targets significantly. Discover why major players like Morgan Stanley and Jefferies believe this stock is a strong investment opportunity amidst the growing demand for energy in India.
Key Takeaways
- Adani Power shows strong operational performance in Q2 FY26.
- Brokerages like Morgan Stanley and Jefferies have raised their price targets significantly.
- The company has a solid PPA bidding pipeline, enhancing its growth prospects.
- Adani Power aims to increase its capacity to 42 GW by 2031-32.
- Strong financial results reflect resilience despite monsoon disruptions.
Ahmedabad, Oct 31 (NationPress) Global brokerage firms continue to show confidence in Adani Power Limited (APL) following its robust operational results for the September quarter (Q2 FY26). Prominent firms like Morgan Stanley, Jefferies, and Cantor Fitzgerald all express favorable outlooks and have revised their price targets upward for the stock on Friday.
Morgan Stanley reaffirmed its ‘Overweight’ rating on Adani Power, maintaining an industry view of ‘In-Line’ and setting a price target of Rs 163.60, indicating a modest 1% upside from the closing price of Rs 162.57 on October 30.
The brokerage emphasized the company’s strong project execution pipeline alongside a healthy receivables position.
Jefferies retained its ‘Buy’ rating and substantially raised its price target to Rs 195 from Rs 138, suggesting a potential 20% upside.
The firm believes that Adani Power merits a valuation premium over state-owned NTPC due to its ‘significantly higher margins and growth rates,’ noting that its P/E multiple trades at an 80% premium compared to NTPC’s 10x.
Similarly, Cantor Fitzgerald upheld an ‘Overweight’ stance and increased its price target by 32% to Rs 184, citing the company’s expanding power purchase agreements (PPAs) and strong earnings visibility.
During its latest earnings call, Adani Power disclosed that its new PPA bidding pipeline is now approximately 22 GW, with 14.5 GW already awarded. The company is currently L1 in a 3.2 GW thermal bid in Assam, while additional bids for Rajasthan (3.2 GW) and Uttarakhand (1.3 GW) are underway.
Earlier this week, Adani Power reported stable financial performance for the quarter, with consolidated revenue at Rs 13,106 crore and EBITDA at Rs 6,001 crore, alongside a 7.4% increase in power sale volumes despite disruptions caused by the monsoon.
The company’s management reiterated its goal of expanding total capacity to 42 GW by 2031-32, expressing confidence in India’s increasing electricity demand and Adani Power’s leadership in the sector.
“Our strong profitability and liquidity position us well to reach our expanded capacity goal of 42 GW by 2031-32. We have already begun ordering equipment and securing land for the entire 23.7 GW expansion, with rapid progress on project implementation,” stated SB Khyalia, CEO of Adani Power Limited on October 30.
Point of View
The positive outlook on Adani Power reflects a broader trend in India's energy sector, where demand is surging. The confidence shown by leading brokerage firms underscores the company's strategic initiatives and robust performance metrics, reinforcing its position as a key player in the market.
NationPress
03/11/2025
Frequently Asked Questions
What are the price targets set by brokerage firms for Adani Power?
Morgan Stanley has set a target of Rs 163.60, Jefferies has raised its target to Rs 195, and Cantor Fitzgerald has increased its target to Rs 184.
Why do analysts believe Adani Power deserves a valuation premium?
Analysts argue that Adani Power's significantly higher margins and growth rates justify a premium over state-run NTPC, as evidenced by its P/E multiples.
What is the current status of Adani Power's PPA bidding pipeline?
Adani Power has approximately 22 GW in its new PPA bidding pipeline, with 14.5 GW already awarded.
What were the financial results for Adani Power in Q2 FY26?
The company reported consolidated revenue of Rs 13,106 crore and EBITDA of Rs 6,001 crore, along with a 7.4% increase in power sale volumes.
What is Adani Power's future capacity expansion goal?
Adani Power aims to expand its total capacity to 42 GW by 2031-32, which reflects its confidence in the growing demand for electricity in India.
