Buy Adani Green Energy; target of Rs 2550: Emkay Global Financial

Emkay Global Financial's research report on Adani Green Energy

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.

Outlook

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.