Adani Power plans to raise generation capacity by 1.7 times to 30.7 GW by 2030: Jefferies

According to a report by Jefferies, APL plans to raise its capacity by 1.7 times, from 17.6 GW to 30.7 GW by 2030.

It said "Adani Power (APL) is India's second-largest thermal power generation company after NTPC, on its journey to raise capacity by 1.7x from 17.6 GW to 30.7 GW by 2030".

The report highlighted that APL has land and financing in place for this expansion. The company is closely working with BHEL for the delivery of equipment, while its in-house engineering, procurement, and construction (EPC) team ensures that capital expenditure is progressing as scheduled.

It believes that India's peak power deficit scenario and APL's exposure to the merchant power market create a positive outlook for the company.

The report estimates a 10 per cent compound annual growth rate (CAGR) in EBITDA between FY24 and FY27.

As the new power capacity becomes operational, EBITDA growth is projected to rise to 19 per cent CAGR between FY27 and FY30. Overall, the report forecasts a 2.2x increase in EBITDA from FY24 to FY30.

To support its expansion plans, APL requires an incremental capital expenditure of Rs 1.6 trillion for adding 13 GW capacity. This investment is expected to be managed through operational cash flows of Rs 1.4 trillion from FY25 to FY30.

The company's debt-to-equity ratio is projected to peak at 1.4x in FY26-FY27, compared to 1x in FY24. However, Jefferies expects the ratio to decline post-FY27 as new plants start generating revenue.

The report highlights that APL's coal supply is secured, ensuring smooth operations for its power plants. The company's plants operating under long-term power purchase agreements (PPAs) have either fuel supply agreements (FSAs) or a pass-through mechanism for imported coal costs. Meanwhile, its merchant power plants have access to both domestic and imported coal.

Jefferies has initiated coverage on Adani Power with a 'Buy' rating, expecting a 30 per cent upside. The report reinforces confidence in APL's expansion plans, making it a compelling investment opportunity in the power sector. (ANI)