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Major 5 GW order secured from Maharashtra

Adani Green Energy (AGEL) announced securing (Letter of Intent issued) supply of 5 GW of solar power to MSEDCL at the price of Rs2.70/kWh under the competitive bidding process initiated by the latter. This, also includes ~1.5 GW of net thermal power supply won by group company Adani Power (APL), which made the combined bid. AGEL will sign a 25-year PPA (expected in 6 months) and supplies will be from the Khavda asset with staggered project development over 3 years (and connection to ISTS). The MSEDCL bidding was a hybrid tender to meet the demand for solar and non-solar hours; as per media reports, other bidders included JSW Energy and Torrent Power. We view this development positively as AGEL’s secured PPA capacity is now ~26 GW and the flat rate of Rs2.7/kWh is also attractive. We reiterate BUY with TP of Rs2,550/sh.

MSEDCL tender award improves long term visibility

The MSEDCL tender for 6.6 GW had ~4 bidders as per media reports. APL placed the bid on behalf of the Adani Group and AGEL will fulfil the solar part as per the tender terms. The tender is one of the largest in India. AGEL has an existing PPA capacity of 20.8 GW, of which 10.7 GW is operational and 10.1 GW is for projects under construction. With this award, same goes up to 25.8 GW, which is ~50% of 50 GW planned by the company by FY29-30. We also view Rs2.7/kWh flat rate for the PPA term of 25 years positively and the same is in sync with ~Rs45mn/MW of solar module cost, which AGEL is guiding as part of project capex. Khavda, with 30 GW, would enjoy significant economies of scale.

Combined bidding provide synergies, AGEL already supplying to Mumbai

On the back of discoms preferring stable power supply even during non-solar hours, hybrid bidding besides the likes of FDRE, RE+BESS/pump hydro etc should gain more traction, and AGEL along with APL stands to gain from these dynamics as seen in this bid. As per media reports, APL has quoted Rs4.08/kWh rate and the same is lower vs Maharashtra’s APPC of Rs4.97. We note that solar CUF rate should be 24% and thermal PLF 85% in this winning bid. AGEL’s Jaisalmer hybrid asset is already supplying power to Mumbai from Mar-2023 and the state has aggressive RPO targets for the next few years.

Recent Total deal and holdco note repayments also adds to sentiments

AGEL has recently made a 50-50 JV agreement with Total involving 1.15 GW of operational and under construction assets – both PPAs and merchant (SPV named ARE64L) – wherein the latter would invest USD444mn. We believe the deal values the assets at more than Rs60mn/MW and hence seems attractive. AGEL has also redeemed holdco notes worth USD750mn recently. The company’s CFO, Phuntsok Wangyal, has resigned and Saurabh Shah (currently Deputy CFO of Adani Enterprises) has been appointed as the new CFO. We maintain BUY and TP of Rs2,550/sh; however, we slightly raise our FY25E/26E/27E EPS by 4%/2%/1% due to a slight 1% revenue adjustment.

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