Adani Green Energy Share Price Target at Rs 1,500: Emkay Global
Adani Green Energy Ltd (AGEL) has reported a robust set of Q4FY25 numbers, with a 31% YoY rise in EBITDA and 44% growth in power sales, driven by higher operational capacity and improved plant utilization. While weather constraints impacted the Khavda project in FY25, the company remains aggressive in its FY26 capacity rollout, targeting 5GW. Emkay maintains a 'Buy' rating, citing the company's expanding renewable footprint, strong PPA pipeline, and valuation upside. Despite rising debt and margin risks, AGEL’s strategic focus and execution give investors long-term visibility and growth potential.
AGEL Reports Strong Q4FY25 Performance
EBITDA climbed 31% YoY to Rs 24 billion, supported by a 30% rise in operational capacity and improved CUF (Capacity Utilization Factor), particularly at Khavda, which touched 32% in Q4.
Power sales surged 44% YoY, while merchant and infirm power constituted 33% of the mix, up from 28% QoQ—highlighting AGEL's growing exposure to higher-yield channels.
Revenue jumped to Rs 30.7 billion, a 22% YoY and 31% QoQ increase, with power supply EBITDA at Rs 24.5 billion and EBITDAM steady around 92%.
Khavda Project and Capacity Growth Trajectory
AGEL’s operational capacity rose to 14.2 GW, including 10.1 GW in solar, 2 GW in wind, and 2.14 GW hybrid. Notably, Khavda contributed 4 GW of capacity despite rainfall disruptions.
The FY26 capacity guidance stands at 5 GW, with 1 GW set for commissioning by mid-May. Beyond FY26, AGEL expects to add capacity at a 25% CAGR, targeting 30 GW at Khavda and 50 GW overall by 2030.
The PPA-to-merchant mix will shift to 75:25, with merchant+commercial and industrial (C&I) portfolios gaining prominence. As of FY25, AGEL had 30 GW in PPA LoAs and 3 GW in merchant capacity.
Realized Tariffs and Revenue Optimization
AGEL’s book realization stood at Rs 3.39/kWh, slightly up QoQ, with solar merchant rates at Rs 3.1–3.2/unit and wind at Rs 5.5/unit. Solar with REC earns Rs 3.6–3.7/unit, while wind with REC touches Rs 6/unit.
Expiry of the ISTS waiver is expected to further enhance value from merchant capacities—especially wind, where returns are relatively higher.
Financials: Profitability on an Uptrend, But Capex Heavy
FY25 revenue reached Rs 112.1 billion, up 23% YoY. EBITDA came in at Rs 88.8 billion, while adjusted PAT rose 34.5% to Rs 16.5 billion.
Net debt increased to Rs 729.3 billion, marking a 37% YoY spike due to a capex-heavy strategy. FY26 net debt is projected to reach Rs 845 billion.
FY26 earnings are forecasted at Rs 31.5 billion, doubling YoY, with EBITDA margin improving from 79.2% in FY25 to 85.7% in FY26.
Investor Positioning and Stock Valuation
Emkay values AGEL at 13x FY31 EV/EBITDA, discounted at 15% CoE to arrive at a target price of Rs 1,500. This reflects a 62.7% upside from current levels.
Current P/E stands at 88.4x FY25 earnings, but is expected to cool down to 48.3x in FY26 and 26.1x by FY28, implying better earnings visibility.
| Metric | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Revenue (Rs bn) | 112.1 | 149.2 | 185.8 | 233.3 |
| EBITDA (Rs bn) | 88.8 | 127.8 | 164.6 | 211.0 |
| Net Profit (Rs bn) | 16.5 | 31.5 | 42.9 | 58.2 |
| EPS (Rs) | 10.4 | 19.1 | 26.1 | 35.3 |
Execution and Risk Management
Capex visibility remains strong, with 95% of FY26’s 5GW expansion already funded. However, net debt/EBITDA is still at 8.2x, highlighting the importance of earnings growth to de-leverage the balance sheet.
Key risks include execution delays, policy fluctuations, cost escalations in renewable energy technology, and variability in wind and solar output.
Interest coverage improved to 1.4x in FY25 and is projected to reach 1.9x by FY28, offering some cushion for debt servicing.
Strategic Outlook and Target Price
AGEL remains India’s largest renewable energy developer, contributing 16% of solar and 14% of wind capacity additions in FY25 alone. The company’s long-term target of 50GW by 2030 reinforces its scale-driven strategy.
The stock is trading at Rs 922 with a 12-month target of Rs 1,500, implying a 62.7% upside. This is based on conservative long-term EBITDA growth assumptions and expanding asset monetization opportunities.
Recommended Entry Zone: Rs 880–950 Stop Loss: Rs 840 Target: Rs 1,500 over 12–18 months
Bottomline: Time to Accumulate with a Long-Term View
While short-term headwinds persist due to rising debt and high capex intensity, Adani Green Energy's strategic positioning, execution ability, and aggressive capacity expansion make it a compelling play on India’s renewable energy story. Backed by a healthy PPA pipeline, growing merchant share, and margin expansion potential, AGEL offers robust upside for long-term investors with high risk tolerance.
