Morgan Stanley has named Adani Power as “the cash compounding machine” and raised its price target to Rs 275 from Rs 173, while maintaining an ‘Overweight’ rating on the stock. The new price target implies an upside of 19% from the closing price on June 23.
This rating upgrade has come on the back of several positive factors. Morgan Stanley said that the company’s incremental business is much lower risk (macro), highly return accretive (micro), fastest growing (vs. history and peers), and backed by a track record of executing complex projects. “This is a rare combination that merits closer attention by markets,” said the brokerage.
Transformation to a lower-risk portfolio
Adani Power’s business model is shifting from a mix of merchant upside and contract-based returns to a more stable “Annuity on PPA” model. This transformation to annuity-based returns on its under-construction capacity significantly reduces the company’s macro risk profile.
Industry-leading growth profile
The company is estimated to have the fastest growth compared to both its own history and its peers, with a projected 24% EBITDA CAGR between FY26-32. This growth is supported by a planned 2.5x increase in its gross block by FY32.
“This change must be viewed in the context of its execution track record on commissioning (vs peers), strong leverage position (vs history and peers) and the benefits of pre-ordering equipment (to BHEL and L&T),” said Morgan Stanley.
Superior return on capital employed (RoCE)
Adani Power is expected to see a strong expansion in RoCE, reaching cycle highs of 20% by FY32. This performance places the company in the top quartile of global peers, especially as many local competitors are facing flat or declining returns.
Strategic capex cost advantage
By pre-ordering equipment, Adani Power secured capex costs that are 10-30% lower than those of its peers (almost Rs 100 million per MW). This cost advantage provides the company with significant flexibility when bidding for upcoming Power Purchase Agreements (PPAs) totalling 14GW across various Indian states.
Valuation premium and strategic importance of coal
Morgan Stanley transitioned its valuation methodology to an enterprise value multiple, applying a 14x premium (compared to the 11-12x of global peers). The brokerage said that this premium is justified by Adani Power’s superior growth and the reinforcement of coal as a central pillar for India’s long-term energy security.
Adani Power share price performance
The share price of Adani Power has dropped 0.52% in the last five trading days. The stock has changed a little in the past one month. However, it has given a return of almost 63% in the last six months. Adani Power’s share price has raised investors’ wealth by 108% over the previous 12 months.
Adani Power Q4FY26
The company recorded a consolidated net profit of Rs 4,271 crore in the fourth quarter of FY26, jumping 64% year-on-year from Rs 2,599 crore posted in Q4FY25, aided primarily by lower tax expenses.
Its revenue from operations surged 10% YoY to Rs 15,989 crore in Q4FY26. On the operating front, the company’s EBITDA increased 27% YoY to Rs 6,498 crore.