Adani Green Energy shares can rally up to 23%. Why Axis Capital, Elara initiated coverage

Highlighting Adani Green Energy's plan to expand its renewable energy capacity 2.5 times to 50 GW, brokerages Axis Capital and Elara Capital initiated coverage on the stock on Friday, assigning target prices of Rs 1,704 and Rs 1,502, respectively.

"We estimate capex requirement of Rs 2.1 lakh crore and believe equity would be fully met through internal accruals with headroom for stronger growth. Net debt to EBITDA would improve to 4.7x by FY32 (FY26: 8.4x). Thereafter, AGEL would generate operating cash flow of over Rs 20,000 crore, enabling >12 GW p.a. additions," Axis Capital said in a report.

What else Axis Capital said

Implying an upside potential of 23% in its base-case scenario, the domestic brokerage initiated coverage on the stock with a 'Buy' rating. It estimates an EBITDA CAGR of 27% over FY26-32E and annual operating cash flow of more than Rs 20,000 crore by FY32, sufficient to fund equity for annual capacity additions of over 12 GW.


According to the brokerage, Adani Green Energy's strategic tie-up with Adani Energy Solutions reduces exposure to merchant price volatility, offers reasonable returns on BESS projects compared with a tightly bid market, and strengthens cash flow visibility.

The company's portfolio is concentrated in the resource-rich regions of Khavda in Gujarat and Rajasthan, creating some exposure to transmission connectivity risks. The Khavda land parcel has a potential of around 42 GW, of which Adani Green Energy holds 30 GW.

"We estimate Adani Green Energy would see a one-year delay in achieving its FY30 target of 45 GW RE, 50 GWh BESS and 5 GW of pumped storage plants due to transmission connectivity delays," Axis Capital said in its note.

Global peers are trading at 13x one-year forward EV/EBITDA despite visibility of a 9% EBITDA CAGR over CY25-28E and an average net debt-to-EBITDA ratio of 4.7x. In comparison, Adani Green Energy's net debt-to-EBITDA ratio is expected to be around 4.7x by FY32, supported by stronger growth visibility, robust cash flows and the significant renewable energy opportunity in India.

Elara Capital sets target price of Rs 1,502

Implying an upside of 9%, Elara Capital initiated coverage on the stock with an 'Accumulate' rating. The brokerage expects an EBITDA CAGR of around 30% and a PAT CAGR of around 42% during FY26-29E, underpinned by robust capacity additions, improving operating leverage and a rising share of high-margin renewable assets.

According to the brokerage, the company is well positioned to capitalise on India's accelerating renewable energy transition.

It plans to expand its energy storage business by scaling BESS capacity from around 3.4 GWh currently to around 10 GWh by FY27, while targeting 50 GWh of storage capacity and 5 GW of pumped storage capacity by FY30. Elara Capital said battery storage and the pumped hydro portfolio would enable greater renewable integration and strengthen future growth visibility.

The brokerage expects strong demand from the commercial and industrial (C&I) segment, particularly from data centres. In the near term, Adani Green Energy plans to operate part of its BESS portfolio under a merchant model. According to the brokerage, the company's strong execution capabilities support rapid capacity additions, reinforcing its market leadership.

Delays in project execution and grid transmission commissioning remain key risks to the investment thesis.

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