Adani Power is the largest private electricity producer in India. Adani group of shares faced a serious bloodbath in January 2022 after the famous Hindenberg report came out targeting the Adani group as being involved in stock manipulation and fraud through shell companies. Since then Adani shares including Adani Power had a topsy-turvy ride in the market.
Adani Power’s stock price fell almost 50% in 1-month but from March 2023 Adani Power’s share price has rebounded more than 35%, and you might be wondering what the target price for the power sector shares will be in 2025.
In this blog post, I will analyze the factors that are likely to influence share prices in the coming years and provide an estimate of Adani Power’s share target price in 2025.
What Will be the Target Price of Adani Power Shares by 2025
Adani Power stock is currently trading at Rs 185 to Rs 190 price levels. According to current analyst opinions, the consensus price target for Adani Power’s shares in 2025 is around Rs. 375 to Rs. 400. This is based on the company’s current financial performance and growth prospects, as well as the overall economic conditions in India.
Some analysts believe that Adani Power’s shares have the potential to rise significantly in the coming years if Adani Group comes clear from the allegations and executes its growth plans effectively.
Price targets are based on a combination of fundamental, and technical analyses of Adani Power’s performance. Let’s have a look at the fundamental & technical analysis of Adani Power.
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Fundamental Analysis of Adani Power Stocks
Let’s look at some of the factors considered by financial experts in their reports to understand the fundamental analysis of Adani Power. Credit rating agency CRISIL has given Adani Power A (Stable) rating as per its latest March 2023 report.
Revenue growth: Adani Power’s revenue growth is negative for the last 1 year with a 1-year CAGR of – 10%. However, Adani Power’s revenue growth for the last 5 years is at 49.5% CAGR.
The company’s revenues are expected to improve in the financial year 2022-23 as the first 3 quarters’ reports have better results as compared to last year’s revenue.
| Year | Revenues (in Crores) |
| 2022-23 (3 Quarters) | 28531 |
| 2021-22 | 31686 |
| 2020-21 | 28150 |
| 2019-20 | 27842 |
| 2018-19 | 26362 |
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Profitability: Adani Power reported a profit of Rs 5485 crores for the last 3 quarters and Rs 4912 crores for the fiscal year 2021-22. However, Adani Power’s net profit decreased by 96% to Rs 8.77 crore in the quarter ending December 2022, compared to Rs 218.5 crore in the previous quarter that ended in December 2021.
| Year | Profit (in crores) |
| 2022-23 (3 Quarters) | 5485 |
| 2021-22 | 4912 |
| 2020-21 | 1270 |
Management quality: Adani Power’s management quality has been questioned in the past due to issues such as corporate governance and monetary transactions.
For example, Adicorp borrowed around Rs 620 crores in 2020 from four other Adani companies including Adani Logistics and Adani Ports. In the same financial year, AdiCorp gave Adani Power a loan worth Rs 608 crores. This has raised the question of whether the loans were being passed through AdiCorp to avoid disclosing their connection to each other.
Growth Plans: Adani Power has announced plans to focus on profitable growth in key segments such as 2 new thermal projects, increasing solar power capacity, and setting up solar parks.
Last year, Adani Power has taken over DB Power Limited from Dainik Bhaskar Group to increase its thermal power plant capacity.
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Technical Analysis of Adani Power Stocks
Adani Power’s share price is likely to be influenced by market sentiment and news flows in the short term. Over the longer term, the company’s financial performance and growth prospects are likely to be the key drivers of its share price.
According to technical analysts such as HDFC Securities, Adani Power’s stock has shown a long-term downtrend from 25 January to 28 Feb. The stock is now moving in the range of 135 to 200 indicating a sideways trend in the stock. The stock is currently trading below its 200-day moving average, which is a bearish signal.
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Factors that Can Affect Adani Power Share Price in 2025
A. Positive Factors
- Economic growth: If the Indian economy continues to grow at a steady rate, it could provide a favorable environment for Adani Power to expand its operations and increase profitability.
- Acquisitions and partnerships: If Adani Power successfully acquires other companies or forms partnerships with other companies, it could increase its market share and diversify its revenue streams.
- New business lines: If Adani Power successfully launches new business lines or products, it could generate additional revenue streams and attract more customers.
- Capital raising: If Adani Power successfully raises capital through equity or debt offerings, it could strengthen its balance sheet and improve investor sentiment.
B. Negative Factors
- Regulatory changes: If the Reserve Bank of India (RBI) or SEBI imposes stricter regulations post its SEBI’s inquiry after the Hindenberg report, it could affect Adani Power’s growth prospects.
- Economic downturns: If there is a global or domestic economic recession, it could reduce electricity demand can negatively impact Adani Power’s profitability.
- Asset quality deterioration: If Adani Power experiences a deterioration in asset quality due to factors such as non-performing loans or fraud, it could negatively impact investor sentiment and result in a decline in share price.
- Coal Price hike: A rise in coal prices can affect the company’s production costs and margins.
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Comparison with Competitors in the Power Sector
Adani Power operates in a highly competitive industry, with many well-established players. Some of its key competitors include Tata Power, NTPC, and Power Grid Corporation. In terms of market capitalization, Adani Power is currently ranked 1st among private power companies.
In terms of the price-to-earnings (P/E) ratio, Adani Power’s current ratio is 7.26, which is lower than the other competiters. This suggests that the company’s shares may be undervalued.
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Conclusion
Adani Power had a difficult beginning of year 2022, because of Hindenberg report havoc but its recent recovery and focus on business expansion into new markets make it an attractive investment opportunity.
Based on current trends and factors such as economic conditions, industry performance, and company-specific developments, we estimate that the target price of Adani Power shares by 2025 could be around Rs 375-400 per share.
You should be mindful of the risks associated with investing in the stock market and do your research before making any investment decisions.
FAQs
The answer to whether Adani Power is a good investment opportunity for long-term investors depends on various factors, including the individual’s investment objectives, risk appetite, and current market conditions. It is advisable to consult a financial advisor before making any investment decision.
Adani Power hasn’t paid any dividends in the last 3 financial years.
The risks associated with investing in Adani Power include regulatory risks, market risks, credit risks, and operational risks, among others. These risks can negatively impact the company’s financial performance and, in turn, its share price.
Adani Power’s strategy for growth includes expanding its power generation capacity by setting up new thermal plants as well as solar parks. Adani is also taking over other companies to increase its other income avenues.
The price-to-earnings (P/E) ratio of Adani Power is 7.26.
To invest in Adani Power shares, you will need to have a demat account with a brokerage firm. You can then place an order to buy Adani Power shares through the brokerage’s trading platform.
It is difficult to predict whether Adani Power will be a good investment in 2025. However, the Adani Power stock’s recent recovery and the company’s focus on future expansion could drive growth and help it improve its revenues.
Adani Power’s share price is affected by several factors, including economic conditions, industry performance, company-specific developments, and analyst opinions.
