Shares of Adani Energy Solutions Ltd. are attracting attention after brokerage firm SMIFS projected a significant 41% upside, recommending a 'buy on dips' strategy. This bullish outlook comes even as several other analysts issued downgrades following the company's fourth-quarter financial results.
Q4 Performance and Analyst Reactions
Adani Energy Solutions reported a robust 27.7% year-on-year jump in net profit to Rs 723 crore for Q4, with revenue from operations increasing by 6.9% to Rs 4,400 crore. Consolidated EBITDA also rose 5% year-on-year to Rs 2,372 crore, though margins remained under pressure during the quarter.
Despite the positive profit growth, some analysts adjusted their ratings:
- Elara Capital downgraded the stock to 'accumulate' but increased its target price to Rs 1,452, citing robust growth potential across transmission, distribution, and smart meters.
- JM Financial maintained an 'add' rating and revised its target price to Rs 1,513, acknowledging strong execution and growth in transmission capitalization and smart meter rollout.
- IDBI Capital downgraded the stock to 'hold' with a target price of Rs 1,448. They noted the commissioning of the Mumbai HVDC project and strong smart metering segment performance, but highlighted the stock's significant premium to peers after recent appreciation.
- PL Capital also changed its rating to 'hold' from 'accumulate,' setting a target price of Rs 1,452. They observed strong visibility in the transmission business and a sizable opportunity in smart metering, yet concluded that current valuations at 17.5 times FY28E EV/EBITDA limit near-term upside compared to peers.
SMIFS's Bullish Technical Outlook
In contrast to the cautious stance of some firms, SMIFS sees a strong technical setup for Adani Energy Solutions. The brokerage highlighted a significant breakout on the weekly chart after an extended consolidation period. SMIFS noted that the price is currently hovering near a 'breakout-retest' band, indicating a healthy pullback and absorption phase.
The firm identified the Rs 1,240–1,200 zone as a crucial 'breakout retest' support area, offering a favorable risk-reward for accumulation. SMIFS's analysis points to an improving trend structure with higher highs and higher lows developing post-base, supported by expanding volume activity during the breakout leg. They recommend buying on dips, specifically in the Rs 1,240–1,200 range, with a target price of Rs 1,800 and a stop loss of Rs 1,180 for a 3-6 month period, suggesting a classic weekly breakout with an attractive risk-reward profile.
Other Group News
In related news, the Gautam Adani-led conglomerate recently reached a settlement with the US Treasury Department's Office of Foreign Assets Control (OFAC) regarding alleged sanctions violations linked to Iran-related LPG transactions. The group agreed to pay $275 million without admitting the allegations.