Adani Green Reaffirms Ambitious Growth Plans, Jefferies Maintains ‘Buy’ Rating

Adani Green Energy Ltd (AGEL), India’s largest listed renewable energy company, has reiterated its commitment to an aggressive expansion strategy aimed at nearly tripling its generation capacity by the end of the decade. Following a management interaction, global brokerage Jefferies maintained its “Buy” rating on the company, highlighting strong execution capabilities, expanding energy storage infrastructure and attractive valuations as key drivers for future growth.

According to Jefferies, AGEL remains firmly on track to increase its installed renewable energy capacity from 19.3 GW in FY26 to 50 GW by 2030. This target includes approximately 5 GW of pumped storage project (PSP) capacity, reflecting the company’s growing focus on round-the-clock renewable power solutions.

The brokerage noted that AGEL’s successful addition of nearly 5 GW of renewable capacity during FY26 provides confidence that a similar pace of expansion can be sustained in FY27. During the year, the company commissioned around 3.4 GW of solar projects, 0.7 GW of wind projects and 1 GW of hybrid renewable energy capacity.

A major pillar of AGEL’s growth strategy is the massive renewable energy park being developed at Khavda in Gujarat. The company plans to build 30 GW of renewable energy capacity at the site, of which 9.4 GW has already become operational. Management expressed confidence that transmission infrastructure and evacuation facilities will be commissioned in line with project timelines, reducing execution risks.

Khavda is regarded as one of India’s most promising renewable energy locations because of its exceptionally high solar irradiation levels, second only to Ladakh. The superior resource profile is expected to boost utilisation rates above 30 per cent, significantly higher than AGEL’s current fleet-wide average of around 25-26 per cent.

In addition to solar and wind projects, the company is rapidly expanding its energy storage portfolio. Jefferies highlighted that Battery Energy Storage Systems (BESS) have become a major focus area for AGEL as they offer opportunities to improve profitability by enabling electricity sales during high-demand evening and night-time hours.

Currently, approximately 73 per cent of AGEL’s installed capacity is backed by long-term power purchase agreements (PPAs), including commercial and industrial customers. The remaining capacity is largely sold through merchant markets, where electricity prices can fluctuate significantly.

India’s electricity demand often peaks during evening and night-time hours, when tariffs can rise sharply and occasionally reach the regulatory cap of Rs 10 per unit. By storing electricity generated during daytime periods and supplying it during peak demand windows, AGEL expects to achieve significantly better realisations compared to daytime merchant prices that are often below Rs 5 per unit.

The company presently operates about 3.4 GWh of battery storage capacity and plans to expand this to more than 10 GWh in FY27. Over the next five years, management aims to build an impressive 50 GWh battery storage platform. To secure long-term supply chains and avoid shortages, AGEL has already signed memorandums of understanding with leading original equipment manufacturers for key battery components.

Jefferies believes these storage investments could materially enhance profitability and strengthen AGEL’s position in India’s evolving power market.

The brokerage also pointed to AGEL’s strong operational and financial performance over recent years. Since January 2023, the company’s installed renewable energy capacity has expanded by around 170 per cent. During the same period, EBITDA has grown at a compound annual growth rate (CAGR) of approximately 25 per cent between FY23 and FY26.

Looking ahead, Jefferies estimates EBITDA growth of around 30 per cent CAGR during FY26-FY29. Revenue is projected to rise from Rs 1.29 lakh crore in FY26 to Rs 2.76 lakh crore by FY29, while adjusted profit after tax is expected to more than double from Rs 18,827 million to over Rs 40,000 million.

Despite this growth trajectory, AGEL’s market capitalisation remains about 23 per cent below levels seen in January 2023. The brokerage noted that valuation multiples have compressed considerably, with the company now trading at a significant discount to historical levels. AGEL’s current one-year forward EV/EBITDA valuation is approximately 56 per cent below its January 2023 peak.

Jefferies has assigned a price target of Rs 1,435 per share, valuing the company at 20 times FY28 estimated EV/EBITDA. The premium valuation relative to peers such as JSW Energy is justified, according to the brokerage, because of AGEL’s higher growth prospects and pure-play renewable energy exposure.

Management attributes its execution strength to several risk-mitigation measures, including advance land acquisition, long-term equipment procurement arrangements, financing through long-tenure bonds and extensive digitalisation of project management processes.

However, Jefferies cautioned that risks remain. Potential delays in project execution, particularly at the Khavda renewable energy park, aggressive industry bidding and any adverse developments related to ongoing US investigations could impact future performance.

Overall, the brokerage remains optimistic that AGEL’s combination of large-scale renewable capacity additions, expanding energy storage capabilities and disciplined execution will support sustained growth over the coming years.

(The content of this article is sourced from a news agency and has not been edited by the Mavericknews30 team.)