Adani Power hits record high; rallies 18% in 4 days on healthy outlook

Shares of Adani Power hit a record high of Rs 611.75, as they rallied 4 per cent on the BSE in Wednesday’s intra-day trade on a healthy business outlook in otherwise a weak market.

The stock of the Adani Group integrated power utilities company is quoting higher for the fourth straight trading days, surging 18 per cent during this period. It surpassed its previous high of Rs 589.30 touched on December 6, 2023. In comparison, the S&P BSE Sensex was quoting down 0.4 per cent at 73,618 at 09:23 AM.

Adani Power delivered strong financial performance during the third quarter of the financial year 2023-24 (Q3FY24), with higher sales volumes and the benefit of lower imported fuel prices.

Adani Power plans to add close to 6 gigawatts (Gw) of new power assets in the next five years, according to an investor presentation by the company. That is clearly meant to ride on India’s burgeoning power demand. CLICK HERE FOR FULL REPORT

Adani Power is now the largest independent power producer in the country, with an operational capacity of 15.2GW, of which 81 per cent is tied up on long-term/medium-term power purchase agreements (PPAs).

India Ratings and Research (Ind-Ra) estimates Adani Power’s sustainable EBITDA generation to be around Rs 13,000 crore over FY24-FY25 on account three main reasons the first is change in law (CIL) claims allowed for Kawai and Tiroda, leading to restitution of economic position in these two plants. Second is signing of additional PPA with MPSEZ Utilities Ltd, led by the freeing up of capacity in the Haryana PPA in Mundra plant, and third being ramp-up of the Mahan I and Godda plants.

Furthermore, Adani Power’s open capacity of 3GW with likely EBITDA generation of around Rs 80 lakh-1 crore/MW would give the EBITDA a material upside for FY24-FY25, given the demand-supply imbalance over the short-to-medium term. Even in case of high e-auction prices, the pithead location for 1.9GW of the plants could ensure high plant load factor (PLF), though the margins will continue to be dependent upon market prices.

CRISIL Ratings believes the operating performance of Adani Power will continue to benefit from 81 per cent of total capacities tied up under long-term PPAs, further ramp-up at the Godda and Mahan power plants, healthy utilisation of merchant capacities backed by strong power demand outlook for the country over the medium term, and robust fuel supply arrangements (FSAs).

Adani Power’s consolidated operating EBITDA will likely remain healthy over Rs 12,000 crore per annum for fiscals 2024 and 2025. However, any moderation in power demand leading to lower-than-expected volume and profitability for Adani Power will remain monitorable, the rating agency had said.