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Morgan Stanley Bullish on Adani Energy, Sees 16% Upside on Grid Growth

Morgan Stanley has initiated coverage on Adani Energy Solutions with an 'overweight' rating and a price target of Rs 1,133, implying a 16% upside. The brokerage highlights the company as a prime beneficiary of India's massive power grid expansion, with over Rs 10 trillion of expected transmission investment in the coming decade. It cites AESL's integrated presence across transmission, distribution, and smart metering, along with a strong execution track record. The report forecasts a 21% EBITDA CAGR through FY30, driven by project wins and its substantial order book.

Key Points: Morgan Stanley Initiates Coverage on Adani Energy, 16% Upside

  • 16% upside to Rs 1,133 target
  • Rs 10 trillion transmission investment ahead
  • 21% EBITDA CAGR forecast
  • Strong execution track record
  • End-to-end grid platform
3 min read

Morgan Stanley turns bullish on Adani Energy Solutions with 16 pc upside

Morgan Stanley gives Adani Energy Solutions an 'overweight' rating, citing India's power grid expansion and a Rs 1,133 price target.

"A key beneficiary of India's long-term power grid expansion - Morgan Stanley report"

Mumbai, Feb 5

Shares of Adani Energy Solutions Ltd rose as much as 2.5 per cent to Rs 1,013 apiece on Thursday despite weakness in broader markets after Morgan Stanley initiated coverage on the stock.

The foreign brokerage gave an 'overweight' rating with a price target of Rs 1,133 -- implying 16 per cent upside from yesterday's closing price.

The brokerage views AESL as a key beneficiary of India's long-term power grid expansion, highlighting over Rs 10 trillion of expected transmission investment over the next decade.

In distribution, it notes policy support for smart metering, including subsidies and measures encouraging private participation.

The global brokerage also highlights AESL's strong execution track record, citing timely and cost-efficient project delivery. It notes the company's integrated presence across transmission, distribution, and smart metering, positioning it as an end-to-end grid infrastructure platform.

Adani Energy Solutions is described as a leading private-sector player in transmission and distribution, with nearly 50 per cent share of private-sector transmission projects, access to around 3.3 million consumers through the Mumbai and Mundra SEZ distribution areas, and a meaningful presence in smart metering.

The report estimates a 21 per cent EBITDA CAGR between FY25 and FY30, with EBITDA expected to reach around Rs 2,600 crore by FY30. Growth is expected to be driven by transmission project wins, regulated distribution capex, and execution of the smart metering order book.

The report identifies transmission as the strongest near to medium-term growth driver, supported by an in-hand order book of about Rs 7,800 crore as of Q3 FY26.

Morgan Stanley assumes AESL could win around 20 per cent of new TBCB projects, representing a potential opportunity of Rs 20,000 crore annually.

In distribution, the report points to opportunities arising from parallel licensing, with AESL targeting a 20 per cent market share.

The regulated asset base is projected to grow at around 11 per cent CAGR, supported by annual capex of roughly Rs 1,600 crore.

In smart metering, AESL targets about 20 per cent market share. Its 24.6 million meter order book is expected to be largely executed by FY27, with smart metering contributing around 9 per cent of FY28 EBITDA, excluding non-IFRS adjustments.

The market is increasingly viewing Adani stocks as value proposition. Several Adani companies including Adani Power, Adani Ports, Adani Green Energy and Adani Enterprises have seen strong surge in their earnings over the past 2-3 years making these stocks an attractive proposition for long-term investors.

Morgan Stanley has also covered Adani Ports & SEZ as well as Adani Power, citing both bullish reflecting confidence in the business models.

- IANS

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Reader Comments

S
Sarah B
While the report is bullish, I hope the execution matches the projections. Smart metering is a great initiative for reducing losses, but implementation on the ground needs to be seamless for consumers. Fingers crossed.
V
Vikram M
Morgan Stanley's coverage adds serious credibility. The 21% EBITDA CAGR forecast is very attractive. It shows how private players are driving efficiency in a sector once dominated by government discoms. A good bet on India's electrification.
P
Priya S
The focus on transmission and smart metering is the right one. In my colony in Bangalore, power cuts are still an issue. We need these investments to reach the last mile. Hope the growth benefits the common citizen too, not just shareholders.
R
Rohit P
After the Hindenburg saga, it's good to see global brokers turning positive. The Adani group has shown resilience. The numbers speak for themselves - ₹7,800 crore order book is no joke. Might be time to add this to the portfolio.
K
Kavya N
A respectful word of caution. These are projections, and the sector is capital intensive and regulated. While the opportunity is huge, investors should be aware of the risks like regulatory changes and interest rate cycles. Do your own research too.
M
Michael C
Interesting analysis

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