Emkay Global has initiated its analysis of Adani Green Energy Ltd (AGEL) with a 'buy' rating and set a target price of Rs 2,550 per share, indicating a potential upside of over 50 percent from the current market price. The brokerage firm commended AGEL for its strong performance, noting that the company’s operational renewable energy (RE) capacity has grown at an impressive 41 percent compound annual growth rate (CAGR) over the last five years.
According to Emkay Global, AGEL is well-positioned for substantial growth, supported by its strategic asset portfolio and significant opportunities within the renewable energy sector. The company has secured extensive sites for solar and wind energy development, particularly in Gujarat and Rajasthan, with a total capacity exceeding 50GW. Additionally, AGEL has over 5GW allocated for pump storage solutions (PSP) and evacuation, further boosting its growth potential.
The report indicates that future growth will be centered around the supersites in Gujarat and Rajasthan, with a particular emphasis on Khavda, which accounts for 67 percent of AGEL's capacity. Emkay Global anticipates AGEL’s revenue to grow at a 35 percent CAGR from FY24 to FY30, driven by these resource-rich locations.
Despite the expected growth in the company’s balance sheet, Emkay Global foresees an improvement in AGEL's leverage ratios. The brokerage projects a decrease in the net debt-to-EBITDA ratio from 7.4 times to 3.6 times. AGEL’s diverse capital base, which includes $3.4 billion in revolving construction facilities and access to affordable global bond markets for its operational phase, is also highlighted as a strength.
Emkay Global analysts predict a gradual reduction in AGEL's cost of debt, while praising the company’s commitment to global best practices in financing. They estimate that AGEL will achieve a 31 percent CAGR in operational RE capacity, reaching 56.5GW by FY30, largely driven by the development of the Khavda supersite from 2GW to as much as 30GW by FY29.
The report also forecasts an increase in capacity utilization factors (CUF) for solar and wind assets. Solar CUF is expected to rise from 24.5 percent in FY24 to 30.3 percent by FY30, while wind CUF is projected to grow from 29.4 percent to 34 percent. This improvement will be fueled by high-yield assets and advancements in module technology.