The Adani Group stocks are in focus today. Most of the stocks are rallying anywhere between 2-10% and Adani Green is no exception. The Jefferies upgrade for the stock has further boosted investor sentiment. Jefferies has a Buy recommendation on Adani Green with a target of Rs 1,300 per share. This implies an upside of nearly 33% for the Adani Green share price from current levels.
Jefferies believes that the strong project pipeline and land bank will provide visibility on achieving the 50 GW capacity target by 2030. The company’s healthy execution track record with prudent capital management will also help “maximise equity value from projects,” they pointed out.
Jefferies on Adani Green: Capacity expansion on track
Adani Green is developing 30 GW Renewable Energy capacity of its planned 50 GW target by 2030 at Khavda. Currently, Khavda capacity is 5.6 GW. Jefferies pointed out that the management had earlier highlighted that ramping up will take place at a faster pace as “now Khavda has a fair amount of basic infrastructure in place.”
A big advantage is that “the location has the best solar irradiation levels after Ladakh in India and should help incremental utilisation levels at 30%+ from 24.8% in FY25.” Their estimates factor in 25.5% utilisation levels between FY26-FY28.
Jefferies on Adani Green: Promoter fund infusion to support
Adani Green’s net debt is at 6.9x and is expected to “reduce to 5.4x by FY30 on our capacity assumptions of 45 GW,” added Jefferies. According to their estimates, the net debt to EBITDA ratio may also come in lower “at 6.9x from 8.3x currently.”
This is after the Promoter group subscribed to 63 million warrants in 2024 at Rs 1,480.75/sh and planned an equity investment of Rs 9,350 crore. About 25% was paid in 2024, and the balance has been infused in April-July.
The international brokerage house added that nearly 80%+ of Adani Green’s installed capacity is tied up under 25-year long-term PPAs which provides steady earnings and cash flow visibility and lends confidence about the balance sheet improving.
Jefferies on Adani Green: Installed capacity up 120% since January, 2023
According to Jefferies, the management managed to limit volatility through advance land acquisition, back-to-back module tie-up, locking rates through long-tenure bonds and digitalisation. This has been instrumental in “process driven execution,” as per Jefferies.
Jefferies pointed out that the price target of Rs1,300 for Adani Green values the company at 20x estimated EV/EBITDA for September 2027. As a result this is at a premium to their 15x target multiple for JSW Energy, given the higher growth and pure renewable assets.
However, investors must watch out for some key risks. These include execution delays, especially at Khavda and the final outcome from US criminal investigation is awaited still.