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Buy Adani Green Energy Ltd For Target Rs. 3,581 - Ventura Securities
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Parabolic growth trajectory while significantly de-risked
Post our initiating coverage of Dec 21, the Adani Green Energy Ltd (AGEL) stock has run up 68% from our recommended price of INR 1,390. The sharp run has been on account of ramp-up in execution and increasing focus on green energy globally. We believe that AGEL with its locked in growth of 20.4GW, superior execution skills and demonstrated ability to onboard capacities at blazing speed is on track to achieve its tall ambitions of 45 GW of renewable power generation by 2031. As we roll forward to FY25, we reiterate our high conviction BUY on this stock with a price objective of INR 3581, representing an upside of 51.7% over the next 24 months.
Capacity ramp up on stipulated path
AGEL has guided for capacity build up to 8.5GW / 25GW by FY23 / FY25 respectively with a long term vision of scaling the renewable energy production to 45GW by FY30. Of this, the locked in capacity stands at 20.4 GW and hence portends robust visibility.
As of FY22, the installed capacity stands at 5.4GW (excluding partially completed capacity of 1.3GW). The 1.3 GW onboarding is pending for long term tranmsision approvals & few other techno commercial reasons. Till the final clearance is obtained, AGEL will indulge in open market sales (which are far higher than the stipulated PPA prices) and writing off the proceeds towards the capex incurred.
Pumped hydro project under evaluation
AGEL has signed an MoU with the Maharashtra government for an investment of INR 60,000 cr to set up pumped storage power projects in the next 5 years, with a total capacity of 11 GW. The power will be supplied to the state run Maharashtra State Electricity Distribution Company (MahaVitaran) and the sites of the pumped storage projects will be decided in consultation with the state water resources department. The project is expected to come up in next 5 years.
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