Target: ₹595 

CMP: ₹510.70

We are initiating coverage of Adani Power Ltd (APL) with an Overweight rating and ₹595 PT. APL is an owner and operator of 11 thermal power plants and one solar power plant in India. With effective capacity of about 17.5 GW, it is the largest privately-owned thermal power generator in India, and was the first player to use more advanced supercritical technology. 

What makes APL interesting, in our view, is the combination of growth (expecting to add 12.5 GW of capacity over next five years), balance sheet flexibility (lowest leverage it has had in several years), and our view that India will continue to meaningfully rely on thermal power as the economy grows and matures. With valuation being quite reasonable, we like the risk/reward at current levels.

We believe risk/reward for APL is attractive at current levels. On our FY26 continuing EBITDA estimates, APL is currently trading at 10.9x. This compares to US peers trading at 11.6x, Europe peers trading at 7.2x, and India peers trading at 11.9x.

With APL having one of the better balance sheets across the industry and a growth profile that we believe is unmatched, we believe shares should at least trade at an in- line multiple to its peer group in India, if not a premium. Our PT of ₹595 is based on a 12.5x EV/EBITDA multiple, implying a small premium.