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Adani Power's Q4 Profit Surge: Strategy Amidst Energy Shift
Adani Power Ltd.'s strong profit figures for the fourth quarter reveal a complex operational picture and strategic positioning within India's changing energy landscape. While lower tax expenses and a stronger EBITDA significantly boosted earnings, the company's focus on thermal power and ambitious capacity expansion plans highlight its commitment to meeting baseload energy demand, even as national policy increasingly favors renewables and market reforms.
Q4 Earnings Driven by Tax Benefits, Operational Stability
Adani Power posted a 64% year-on-year profit increase to ₹4,271 crore for the fourth quarter of fiscal year 2026. This jump was primarily due to lower tax expenses and other income, as core revenue was nearly flat, down 0.10% to ₹14,233 crore. However, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) showed strength, rising 27% to ₹6,498 crore. Power sales volume saw a modest increase to 27.2 billion units (BU) for the quarter and 99.15 BU for the full fiscal year. The company expanded its long-term Power Purchase Agreements (PPAs), securing an additional 1,600 MW, bringing its total PPA-contracted capacity to 13.3 GW, covering about 95% of its operating capacity. This high coverage ensures significant revenue visibility.
As of April 29, 2026, Adani Power's stock traded around ₹223.35, with recent highs near ₹226.24. Significant trading volume in late April 2026 pointed to investor interest, though price movements were mixed. The stock had gained about 55.92% year-to-date as of April 28, 2026.
Valuation and Policy Contrast
Adani Power's current price-to-earnings (P/E) ratio ranges from 31.3 to 38.16, higher than state-owned peers NTPC (20.23-24.83x) and Power Grid Corporation (19.0-20.23x). Its valuation is similar to Tata Power (33.01-36.7x) and Torrent Power (27.58x), but lower than JSW Energy (39.41x) and NHPC (43.02x). With a market capitalization of roughly ₹4.2-4.3 lakh crore, Adani Power is a large-cap player, larger than Tata Power but smaller than NTPC. The company has substantially reduced its debt, with the debt-to-equity ratio falling to about 0.68-0.81.
Meanwhile, India's power sector is evolving under the Draft National Electricity Policy (NEP) 2026, which aims to boost per capita electricity consumption to over 4,000 kWh by 2047 and achieve net-zero emissions by 2070. The NEP emphasizes renewable energy, storage, and nuclear power, alongside market reforms and grid upgrades. While thermal power is recognized for baseload support, its long-term role is under review. Adani Power's current thermal capacity exceeds 18 GW, with plans to reach 41.87 GW by FY32. This expansion aims to meet rising demand but contrasts with the NEP's decarbonization goals. Adani Power's P/E ratio has historically fluctuated, reaching a peak of 25.83x in March 2021 and a low of 6.89x in March 2023, indicating its current P/E is on the higher side of its past range.
Concerns Over Profit Sustainability and Fossil Fuel Reliance
Despite the profit surge, Adani Power faces concerns about the sustainability of its earnings. The Q4 profit jump was mainly from tax benefits and non-core income, with core revenues flat, a point that differs from some reports suggesting 10% revenue growth. This reliance on non-operational factors raises questions. Adani Power's energy mix shows 0% renewable sourcing in 2024, indicating heavy dependence on fossil fuels like coal. This contrasts with India's NEP 2026 focus on renewables. While PPAs secure revenue, they also commit the company to thermal power. The plan for 41.87 GW by FY32 requires significant capital, posing execution and financing risks. Analyst consensus generally favors 'Buy' or 'Strong Buy', but price targets around ₹180-187 INR suggest potential downside from current prices. MarketsMOJO recently upgraded its rating from 'Sell' to 'Hold', indicating a neutral view rather than strong conviction.
Outlook: Thermal Power's Role and Analyst Views
Adani Power CEO S B Khyalia stated that thermal power is crucial for India's energy security and grid stability during the renewable energy transition. The company aims for prudent capital allocation and securing long-term contracts to fund its capacity expansion. Analyst ratings largely recommend 'Buy' or 'Strong Buy' for Adani Power, with average 12-month price targets between ₹180.14 and ₹187 INR. These targets, while suggesting a potential downside from current market levels, reflect expectations of continued growth driven by India's rising energy demand and Adani Power's expansion plans.