Target: ₹930
CMP: ₹669.60
Adani Energy Solutions (AESL) is set to post robust growth in its transmission, distribution, and smart meters businesses. Transmission EBITDA is likely to double to ₹7,600 crore by FY27, driven by India’s renewable energy (RE) target, 20-25 per cent market share in ₹84,000 crore near term transmission bid and an ₹54,800 crore project pipeline.
In distribution, Mundra SEZ demand is set to surge from 50 MW to 5 GW, pushing regulated asset base (RAB) to ₹1,500-2,000 crore while Mumbai operations would get annual capex of ₹1,200-1,500 crore, which would increase regulated equity to ₹6,000 crore by FY27. AESL also dominates the smart meters space with a 17 per cent market share at 23 million meters, sustaining an EBITDA margin of 85 per cent.
We initiate AESL with a Buy rating and a SOTP-based TP of ₹930. Additionally, we attribute an option value of ₹196 per share for its upcoming smart meter projects and ₹156 per share for the new transmission projects under national electricity plan opportunity.
Key risks include increased competition and the need for timely project execution.