Jefferies bullish on Adani Green Energy's growth trajectory
Global brokerage Jefferies has reiterated its optimistic outlook for Adani Green Energy Ltd (AGEL), projecting a potential 69% upside for the stock despite its recent short-term correction. The firm's analysis highlights AGEL's unwavering confidence in achieving its ambitious capacity addition targets and expanding its battery storage capabilities.
Ambitious Capacity & Storage Expansion Plans
AGEL is firmly on track to add 5 GW of renewable energy capacity in FY27E, strategically aligning project timelines with available transmission infrastructure to mitigate curtailment risks. Furthermore, the company plans a substantial increase in its Battery Energy Storage System (BESS) capacity, aiming to boost it from 3.6 GWh currently to over 10 GWh by FY27E. This expansion supports its overarching goal of reaching 50 GW by 2030, which includes 5 GW of Pumped Storage Project (PSP) capacity spread across multiple Indian states.
The Khavda renewable energy park is set to become an even more critical asset, with its share in AGEL's operating capacity projected to rise from 47% to 60% under the 2030 plan. Khavda boasts India's second-best solar irradiation levels after Ladakh, which is expected to enhance project utilization rates significantly, from the current company average of 25-26% to over 30%.
Strengthening Financial Health and Growth Prospects
AGEL's financial health is also on an improving trajectory. Net debt to EBITDA is anticipated to decline from 8.9x in FY26 to 7.1x by FY30E, based on a 44 GW capacity assumption. This improvement is bolstered by a substantial equity investment of Rs 93.5 billion from the promoter group, with warrants subscribed in 2024 and the balance infused between April and July 2025.
The company benefits from stable cash flow visibility, primarily due to its long-term power purchase agreements (PPAs) that tie up most of its installed capacity. AGEL plans a significant capital expenditure of Rs 420 billion in FY27E to fuel its growth. Over the FY26-30E period, EBITDA is forecast to grow at a 30% CAGR, with EPS projected to increase at a 26% CAGR, reflecting strong operational performance and prudent capital management.
Jefferies' Price Targets and Potential Risks
Jefferies has set a base case price target of Rs 1,695 for AGEL, implying a 34% upside based on 20x EV/EBITDA for September 2028E. This valuation premium over peers like JSW Energy is justified by AGEL's higher growth potential and pure-play renewable asset base. In an upside scenario, where visibility on the 50 GW target improves with more project wins, the target could reach Rs 2,140, indicating a 69% upside.
However, the brokerage also notes potential risks, including execution delays, particularly at the Khavda site, and aggressive bidding in new projects. Despite these factors, AGEL’s management strategy, including advance land acquisition, back-to-back module tie-ups, and rate locking through long-tenure bonds, aims to mitigate volatility and ensure consistent execution.