Global brokerage Jefferies has initiated a 'Buy' rating on Adani Energy Solutions Ltd (AESL), formerly Adani Transmission Ltd, projecting a significant 46% upside. The firm set a 12-month target price of Rs 2,060 for AESL, based on an assessed price of Rs 1,407.50.
Strategic Agreements Bolster Confidence in AESL
A key factor underpinning Jefferies' optimistic outlook is AESL's substantial 2.5 GW round-the-clock (RTC) power supply agreement with Maharashtra State Electricity Distribution Co. Ltd (MSEDCL). This long-term contract spans 25 years, providing stable revenue streams.
During its first-quarter FY27 earnings call, AESL management indicated its strategic aim to tie up most of its capacity on the consumer side. Jefferies noted that this strategy is expected to increase the tied-up volumes of the trading segment to 57% in FY28E, up from 20% at the end of Q1 FY27. This shift is anticipated to make the company's EBITDA profile more sustainable.
Re-rating Potential in Trading Segment
Jefferies currently values AESL's trading business at 5x EV/EBITDA Sept 28E, significantly lower than the 22x for its ex-trading business, attributing this disparity to the volatile nature of the trading segment. However, the brokerage highlighted that as tie-ups increase and volatility diminishes, there is considerable scope for a re-rating of this segment.
The report also pointed out that average merchant prices in Q2 FY27 to date have seen a substantial increase, rising 48% year-over-year and 14% quarter-over-quarter to Rs 5.8/unit. The first week of September 2026 even saw a peak of Rs 7.5/unit. Jefferies suggested that this trend could lead to a positive surprise in the trading segment's Q2 results, noting that every 5% change in realization adds 3% to their FY27E EBITDA.
Downside Risks and Other Adani Group Ratings
Despite the positive outlook, Jefferies flagged potential downside risks for AESL, including the inability to maintain favorable interest rates and the possibility of market share loss.
Beyond AESL, Jefferies also issued 'Buy' ratings for other Adani Group entities: Adani Green Energy Ltd (AGEL) with a target price of Rs 1,328, and Adani Power Ltd with a target price of Rs 215.