Brokers’ Call: Adani Power may Touch Rs 35: Nomura

Nomura has maintained its ‘Reduce’ rating on Adani Power with a target price of Rs 35.It said medium and longer-term earnings outlook for APL continues to hinge on the final outcome of regulatory and legal events relating to PPAs and fuel sourcing; the ‘compensatory tariff’ awarded by CERC has now been challenged in APTEL.

Imminent equity infusion by the promoters would lower leverage but entail EPS dilution. The stock trades at 1.6x P/B, 7.8x EV/EBITDA and 12.5x P/E on Nomura’s FY14F EPS of Rs 3.5 and BVPS of Rs 27.3.