Buy Adani Transmission; target of Rs 154: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss' research report on Adani Transmission

We initiate coverage on Adani Transmission (ATL) with ‘BUY’ and NPVbased TP of INR154. Our conviction is underpinned by: 1) whopping INR3tn domestic transmission opportunity over FY18-22; 2) aggressively growing ATL capturing 20% of TBCB projects; 3) debt restructuring & additional leveraging boosting IRR of existing/M&A projects by 300- 400bps; and 4) scale & synergy benefits as O&M costs are spread across projects. Hence, we estimate the company to clock 19% and 36% EBITDA and PAT CAGR, respectively, over FY17-19. We expect ATL to generate robust FCF, though we do anticipate high growth and M&A appetite. Cost overruns in new projects, aggressive bidding in TBCB projects, unfavourable regulatory changes and delay in true-up orders are risks.

Outlook
With existing assets generating INR10bn FCF p.a., ATL is positioned to satiate its growth and M&A appetite. Moreover, potential to fund its aggressive growth plan at lower cost lends an edge. In our NPV-based TP of INR154, we assign 25% to growth value. Our valuations could be in INR154-185 range if we assign a higher market share provided the company maintains same economies in expansion. Initiate coverage with ‘BUY/SO’.
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