One of the top private producers of thermal electricity in India is Adani Electricity Limited (NSEI: ADANIPWR). Adani Power operates as a division of the well-known Adani Group conglomerate headed by billionaire business tycoon Gautam Adani. In the span of a single decade, Adani Power has experienced tremendous growth to establish itself as a major participant within India’s vital power generation sector. This article will analyse several compelling reasons why Adani Power share price deserves consideration for inclusion in investment portfolios and future aspect, especially those with an Indian equity focus.
1. Strong Growth Prospects in India’s Power Sector
India’s economy is expanding swiftly, with GDP growth projected to average over 7% annually through 2030. Rapid industrialization and urbanization are driving electricity demand higher. Total power requirement may triple over the next two decades. On the supply side, this is a significant potential for businesses like Adani Power.
Adani Power finds itself well-situated to facilitate expansion of India’s coal-dependent power infrastructure amidst this continued dominance of coal as an energy source. Domestic coal production has lagged demand, forcing India to ramp up coal imports. Adani Power is integrating imported coal at several new plants, buffering it from India’s domestic coal shortages. The company is also expanding into emerging areas like solar power generation, aligning it with India’s renewable energy push.
2. Dominant Market Position
Adani Power has rapidly ascended in recent years to rank among the leading private thermal electricity producers in India, controlling around 7% of installed capacity nationwide. The company runs coal-fired power plants totalling 12,450 megawatts distributed over four Indian states: Gujarat, Maharashtra, Karnataka, and Rajasthan. Adani Power also presently manages 1,600 megawatts of renewable energy capacity, with ambitions aimed at considerably enlarging this green power component. Through focused execution and strategic expansion, Adani Power has attained a prime position in India’s vital power generation industry within a relatively short timeframe.
3. Strong Parentage and Execution Track Record
Adani Power benefits immensely from being part of the reputed Adani conglomerate. The group’s formidable financial resources and project execution capabilities have been leveraged by Adani Power. The promoter family’s strong relationships across India’s political spectrum have also aided the company’s swift rise. Adani Group’s sterling track record of building core infrastructure assets highlights its project management expertise.
4. Financial Performance and Dividend Yield
Adani Power has delivered robust financial performance as its capacity expansion drive gains traction. Revenues grew at a 3-year CAGR of 22% to ₹26,361 crores. Profitability has surged with EBITDA up 46% CAGR to ₹10,597 crores. Despite debt funded investments, prudent project execution has ensured comfortable debt coverage metrics. Adani Power maintains sound liquidity with cash equivalents of ₹1,500 crores.
Conclusion
Adani Power’s growth has mirrored India’s power infrastructure build-out. It is poised to
harness opportunities from rising power demand over the next decade. The company boasts a leadership position, strong parentage, execution expertise and robust financial performance. Adani Power’s 5% dividend yield adds to its appeal for investors. Indian equities exposure can benefit from having this high-quality power sector at good price. Besides Adani, Reliance Power can also be considered for power portfolio with Reliance Power share price being at Rs.17. But Adani Power deserves consideration among leading power generation stocks in India.
