Adani's power transmission biz to be "biggest beneficiary" of 2024's game-changing reform: Jefferies

The analysts expect power generation, and transmission and distribution (T&D) investments to rise to $280 billion.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Adani Transmission (now Adani Energy Solutions) will be the biggest beneficiary of "game-changing" power distribution reform, said Jefferies.

The brokerage, in its latest report on the 2024 outlook for the sector, said that reform to promote privatisation in power distribution will be back on the table after the May 2024 reform. The report added that it will improve private participation in distribution and the financial health of distribution companies.

Also read: Short Call | Mad rush for power stocks; Railtel in top gear; Kalpataru on realty boom; Vi date with Musk

The analysts wrote, "The Electricity Distribution Act, to promote privatisation, is currently with the Parliamentary Standing Committee. The idea is for State Electricity Boards (SEBs) to be pushed to eventually raise tariffs for the heavily subsidised agriculture sector and reduce losses, as private distribution companies can provide power lower than the rates SEBs are providing to industrial consumers. This reform will see private sector participation in distribution rising and also strengthen the weak financials of distribution in the long run."

They added, "Adani Transmission is the biggest beneficiary of the same." In July 2023, Adani Transmission was renamed Adani Energy Solutions.

In the power sector, the brokerage's top picks are NTPC, JSW Energy and Power Grid.

Explaining their rationale, the analysts wrote: "We believe NTPC’s (Buy) re-rating will continue as its RE capacity CAGR is 39% and FY24E-26E double-digit EPS CAGR at 11% (9% in FY04-10). The company is still trading at 1.7x FY26E PB, 27% below its FY03-10 avg multiple. Our PT factors 2.3x target PB, which is 40% below the previous FY03-10 upcycle peak, given some coal ESG discount will be there and in line with the FY03-10 average."

They added, "JSW Energy (Buy) is a good blend of steady-return projects and higher cash flow generation from merchant capacity as spot prices remain elevated in the next 24 months. PGCIL (Buy) will trend higher as its capex rises and dividend payout remains elevated with monetisation, but given a lower EPS CAGR of 5% vs .18% on a low base in FY03-10, we value it at a 10% discount to FY03-10 average of 3x."

Also read: Hunt for a new 'Adani' in the next bull market cycle, says Amit Jeswani of Stallion Asset

The analysts expect power generation, and transmission and distribution (T&D) investments to rise 2.2x to $280 billion over FY24E-30E versus the investments made over FY17-23.

After underinvestment in the sector over the past decade and with the possibility of demand for power growing at over 7 percent, they believe the focus will be on accelerating capacity addition, higher merchant prices and power T&D equipment ordering in 2024.

(Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)