Adani Energy Solutions shares gained after Jefferies reaffirmed its Buy rating and ₹2,060 price target. The brokerage highlights a strong transmission pipeline, scaling of the smart meter business, and a recent 2.5 GW power supply deal as key growth drivers for the infrastructure major.
Adani Energy Solutions saw market interest on Friday following a positive report from Jefferies. The brokerage reiterated its Buy rating on the stock with a price target of ₹2,060, citing a sustained growth roadmap across the company's three main business verticals: transmission, smart metering, and power trading.
Transmission and Infrastructure Growth
The company’s core transmission business remains a primary revenue driver. Adani Energy Solutions holds an estimated 23% market share in private competitive transmission bidding, trailing only the state-owned Power Grid Corporation of India. Jefferies highlighted that the industry's total bid pipeline has grown to approximately ₹1.1 trillion, up from ₹900 billion a year ago, creating a significant opportunity for the company to secure new projects.
To support these projects, the company has an annual capital expenditure run-rate of ₹200-250 billion. While this spending plan is essential for building long-term infrastructure, it is a key area for investors to monitor. High capital spending in infrastructure sectors requires efficient project execution to ensure that debt levels remain manageable and that assets generate expected returns over time.
Diversification and Trading Segment
Beyond transmission, the company is focusing on its smart meter business, where operational improvements are expected to aid future earnings. In the power trading segment, the company has secured a 2.5 GW round-the-clock power supply agreement with the Maharashtra State Electricity Distribution Company Limited. This deal is significant as it improves earnings visibility by tying up trading volumes. By the end of FY28, the company expects that roughly 57% of its trading capacity will be contracted, a notable increase from 20% in the first quarter of FY27.
While the trading business is growing, Jefferies noted that it carries different risk characteristics compared to regulated transmission assets, leading the brokerage to assign a lower valuation multiple to this segment. The trading business is estimated to contribute about 10-11% of the total EBITDA but accounts for a smaller percentage of the overall company valuation.
Moving forward, the primary factors for investors to track include the speed of transmission project execution, the ability to maintain profit margins amid heavy infrastructure spending, and the company's success in transitioning more of its trading capacity into long-term, stable power supply agreements.