Morgan Stanley has initiated coverage on Adani Energy Solutions Ltd. with an ‘overweight’ rating and a target price of Rs 1,133, citing the company’s play on India’s energy future and a strong positioning, thanks to its multiple growth drivers that make the long-term outlook quite favourable.
The brokerage firm adds that the company has a large-scale execution record across the board, while diversified earnings growth levers across transmission and distribution, only adding to the favourable outlook for the company.
Another key area of growth for Adani Energy Solutions is smart meters, a segment that has proven to be lucrative in recent years. Morgan Stanley believes the earnings outlook for the company has more upside as it wins more smart meter contracts and as the distribution opportunity opens for the private sector.
Keeping that in mind, the firm is projecting an Ebitda CAGR of around 21% for Adani Energy Solutions over the period of FY25-FY30, during which the company is targeting a 20-25% market share in the Transmission segment, which in turn, could see Ebitda CAR of around 30% between FY25-28.
In the Distribution segment, Adani Energy Solutions is targeting a 20% market share in parallel licensing, while the company is targeting a 20% market share in the smart metering segment.
Keeping all these factors in mind, Morgan Stanley remains bullish on Adani Energy Solutions and sees an upside potential of over 14% from current levels.
Currently trading with a relative strength index of 49, which suggests neutral market sentiment, shares of Adani Energy Solutions have gained half a percent in trade on Thursday. Over a period of 12-months, the stock has given returns of more than 28%.
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