Adani Power Set to Significantly Increase Presence in Thermal Power Sector by FY32
Adani Power, India's second-largest power producer in terms of coal capacity and generation, is gearing up for a substantial growth period. The company, led by Gautam Adani, has announced plans to invest Rs 21,000 crore in a power project in Madhya Pradesh, aiming to significantly boost its power capacity.
The expansion is expected to significantly increase Adani Power's capacity, which currently stands at 18.15 GW. By the first quarter of FY26, the capacity is projected to reach 41.9 GW by FY32, nearly doubling Adani Power's market share in the thermal segment to 15% by FY32, as predicted by Morgan Stanley.
The timely completion of these power projects is expected to drive earnings for Adani Power, with Power Purchase Agreements (PPAs) playing a crucial role in this earnings growth.
Adani Power's merchant portfolio, currently at 20%, is forecasted to decrease as a result of these projects. The profitability in the 2.9 GW power plants recently acquired by Adani Power is also expected to improve.
Morgan Stanley has highlighted Adani Power's strong balance sheet, with a FY25 net debt/Ebitda of 1.5x. However, the net debt-to-Ebitda ratio for Adani Power is forecasted to peak at 3.2x by FY29, with net debt expected to peak at Rs 1.32 lakh crore by FY31.
Brokerage expects 60-65% of Adani Power's $27-billion capital expenditure for a capacity addition of 23.7 GW to be met through internal accruals. India's largest lender, State Bank of India, has agreed to support Adani Power in financing its planned investment in the Madhya Pradesh Power Project.
India is planning to add 80 GW of coal capacity by FY32, with a large PPA pipeline of over 20 GW in India. Adani Power is well-positioned to capitalise on this growth in the power sector, with a market share of 8% in the power production sector by FY25, making it the second-largest power producer in India.
By FY33, Adani Power's Ebitda is forecasted to reach Rs 67,200 crore, with a compound annual growth rate of 17% between FY22 and FY33. This growth is set to make Adani Power a major player in India's power sector in the coming years.
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