Quarterly Result Update - Adani Power Limited (Buy in the Range of 210-215 and Add On Dips of 195-200 Range)

Industry	LTP	Recommendation	Target	Time Horizon
Power	Rs 212.2	Buy in the range of 210-215 and add on dips of 195-200 range	Rs 220	4 quarters

Continuing operating revenue (Sale of power in the current period) increased by 28.08%/21% YoY/QoQ to Rs. 17,550 Cr, driven by a significant increase in power demand and higher realisations. Continuing EBITDA came in at Rs. 6,982 Cr, up 21.57% YoY, led by higher volumes and improved PPA tariff contribution. Operational revenues (Continuing + prior period recognition) came in at Rs 18,901.9 Cr (+34%/+32.9% YoY/QoQ) whereas Operating EBITDA grew by 39.8%/68% YoY/QoQ to Rs 7,948.7 Cr. Better unit realisations led to EBITDA margins rising to 42.1% against 40.3% in Q1FY26. APAT for the quarter was Rs 4,805.7 Cr against Rs 3,305.1 Cr in Q1FY26 (+42%/17% YoY/QoQ), with margins rising from 23.4% to 25.7% YoY.

Generation/Sales volume came in at 31/28.8 BU in Q1FY27 against 25.7/24.6 BU in Q1FY26, led by capacity addition of 580 MW YoY. Average Realisations improved from 5.6 Rs/unit in Q1FY26 to 6.1 Rs/unit in the current quarter, primarily from higher PLFs (78% against 67% in Q1FY26) and PAFs (96% vs 89% in Q1FY26). Gross debt as of Q1FY27 stood at Rs 58,381 Cr and Net debt at Rs 47,463 Cr. Net Debt/Continuing EBITDA was 2.12x, indicating comfortable levels of debt for the company.

Adani Power has articulated an ambitious growth strategy to lead India’s conventional power segment, with a planned capacity addition of 23.7 GW (excluding an additional 3 GW under proposal). This expansion is strategically positioned to address the intermittency challenges associated with renewable energy, while its tied-up sales model provides strong revenue visibility, with long-term PPAs already secured for around 56% of the upcoming capacity. Furthermore, the company maintains a prudent leverage profile supported by a robust cash position. Coupled with consistently superior return ratios driven by acquisition-led growth, these factors reinforce confidence in the company’s fundamentals and justify a valuation premium relative to peers.

Adani Power Limited is emerging as a key beneficiary of the renewed policy thrust on conventional generation, supported by its scale, diversified asset base and demonstrated execution capabilities. The forthcoming capacity addition is predominantly greenfield, with management indicating a selective approach to brownfield opportunities where they offer superior returns and execution visibility. Concurrently, the company intends to progressively contract its entire operational and upcoming capacity under long-term PPAs, thereby materially strengthening revenue visibility and curbing merchant exposure. This strategic mix of disciplined leverage, calibrated expansion and an increasingly contracted portfolio is expected to underpin a more stable earnings and cash flow profile, reinforcing the case for a valuation premium relative to peers.

Accordingly, we raise our target FY28 EV/EBITDA multiple to 19x (from 14x earlier) (link), implying a Target Price of Rs 240. We recommend investors BUY the stock in the range of 215-210 and add on dips of Rs 200-195 as we expect APL to deliver revenue/EBITDA/PAT at a CAGR % of 18.8%/19.2%/10.4% over FY27E–FY29E, underpinned by aggressive capacity addition and prudent balance sheet management.