Multibagger Alert: Adani Energy Solutions Shares Could Surge by 149% in Bull Case, Says Ventura

Ventura Securities has identified Adani Energy Solutions Ltd (formerly Adani Transmission Ltd) as a leader in India's private power transmission sector, holding a 30 percent market share. The firm is bullish on the Adani group stock, projecting a two-year base target price of Rs 1,675 per share, which suggests a potential upside of 116.9 percent. In a bullish scenario, Ventura anticipates a possible upside of 149 percent for Adani Energy Solutions.

The bullish case assumes an annual revenue of Rs 30,000 crore, growing at a compound annual growth rate (CAGR) of 21.8 percent from FY24 to FY27, with an EBITDA margin of 47 percent and a valuation of 20 times EV/EBITDA. The base case anticipates revenue of Rs 28,544 crore, an EBITDA margin of 45 percent, and a valuation of 19.6 times EV/EBITDA. In contrast, the bear case target is set at Rs 649, assuming revenue of Rs 20,000 crore grows at a CAGR of 6.4 percent, an EBITDA margin of 40 percent, and a valuation of 15 times EV/EBITDA. This scenario indicates a potential downside of about 16 percent.

Ventura notes that Adani Energy Solutions operates in the power transmission and distribution (T&D) sector, acquiring projects primarily through tariff-based competitive bidding (TBCB). The company is a key distributor of power in Mumbai and Mundra, focusing on the development, operation, and maintenance of power T&D networks under 35-year contracts. "AESL generates fixed tariff-based returns or Returns on Assets (RoA) annually, ensuring stable and predictable cash flow," the report stated.

Furthermore, Ventura highlighted that Adani Energy Solutions is diversifying into the smart meter segment to drive future growth. Despite stock volatility following Hindenburg’s renewed allegations in November 2024, Adani Energy Solutions has shown resilience, backed by strong fundamentals and operational strength, according to the brokerage.

The distribution business remains robust, delivering a 15 percent RoA, supported by a capital expenditure plan exceeding Rs 10,000 crore over the next six years, which is expected to significantly boost EBITDA growth. In order to fund its business expansion, Adani Energy Solutions raised Rs 8,373 crore through a Qualified Institutional Placement (QIP) in August 2024 at Rs 976 per share. This marked the Adani Group’s first capital raise following the Hindenburg episode, attracting strong interest from global and domestic investors.

Over the period from FY24 to FY27, AESL’s revenue, EBITDA, and net profit are projected to grow at CAGRs of 19.8 percent, 31 percent, and 50.6 percent, reaching Rs 28,544 crore, Rs 12,843 crore, and Rs 3,881 crore, respectively. It is anticipated that EBITDA and net margins will expand by 1,060 basis points to 45 percent and by 675 basis points to 13.6 percent, respectively, according to Ventura.

Disclaimer: IPO Insider offers stock market updates purely for informational purposes. It should not be interpreted as investment advice. We strongly recommend consulting with a qualified financial advisor before making any investment decisions.