Adani Power Limited has secured favorable credit rating actions from CareEdge Ratings, with the agency assigning and reaffirming CARE AA; Stable ratings across the company's comprehensive facility portfolio worth ₹69,000 crore. The rating actions demonstrate strong confidence in the power generation company's financial profile and operational capabilities.

Credit Rating Details

CareEdge Ratings has taken multiple rating actions on Adani Power's facilities, combining new assignments with reaffirmations of existing ratings. The comprehensive rating coverage spans across different types of financial instruments and facilities.

The rating agency has assigned CARE AA; Stable rating to additional term loan facilities worth ₹12,000.00 crore, while reaffirming the same rating grade on existing bank facilities of ₹46,000.00 crore and proposed Non-Convertible Debentures valued at ₹11,000.00 crore.

Rating Rationale

The CARE AA; Stable rating reflects several key strengths in Adani Power's business profile and financial position. CareEdge Ratings has highlighted the company's strong revenue visibility, which stems from a high degree of tie-ups for its operational capacity, ensuring predictable cash flows.

The rating agency has also recognized the company's stable operating performance and robust balance sheet position. Additionally, Adani Power benefits from a diverse set of offtakers, which helps mitigate concentration risk and provides revenue stability across different customer segments.

Strategic Positioning

The rating assessment takes into account Adani Power's recent tie-ups for upcoming capacity, indicating the company's growth trajectory and expansion plans. This forward-looking capacity addition demonstrates the company's ability to secure long-term contracts and maintain its competitive position in the power generation sector.

The comprehensive rating coverage across different facility types provides Adani Power with enhanced financial flexibility and access to diverse funding sources. The reaffirmation of existing ratings alongside new assignments indicates consistent credit quality across the company's financial instruments.

Regulatory Compliance

Adani Power has disclosed these rating actions in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company has informed both BSE Limited and National Stock Exchange of India Limited about the credit rating developments, ensuring transparency with stakeholders and regulatory authorities.

JM Financial has initiated coverage on Adani Power with a Buy rating, positioning the company as a key beneficiary of India's expanding power demand landscape. The brokerage has set a target price of ₹178 per share, representing approximately 20% upside from current levels and valuing the stock at 13 times fiscal 2028 EV/EBITDA.

Strong Market Position and Growth Trajectory

Adani Power has established itself as India's largest private sector thermal power producer, with current installed capacity reaching 18.10GW. The company's capacity portfolio comprises 10.80GW of organic capacity and 7.30GW added through strategic acquisitions. The company has set ambitious expansion targets, aiming to reach 41.90GW by fiscal 2032.

Power Demand Growth Projections

JM Financial's bullish outlook is anchored on India's substantial power demand growth trajectory. Peak power demand is projected to rise significantly across multiple time horizons, with thermal power expected to remain indispensable for grid reliability as renewable energy's variable nature increases.

Operational Excellence and Execution Capabilities

The company demonstrates strong operational metrics with plant load factor of approximately 71.00% and plant availability factor of about 91.00%. JM Financial highlights Adani Power's execution capabilities, noting industry benchmarks including synchronization of 4,620MW capacity at Mundra within 36 months. The company's early equipment pre-ordering strategy reduces execution risks and improves project timelines.

Financial Projections and Investment Requirements

JM Financial expects significant profitability improvements, with EBITDA per MW projected to increase from approximately ₹1.30 crore in fiscal 2025 to around ₹1.80 crore by financial year 2032. The expansion program requires substantial capital investment of around ₹2 trillion over financial year 2025-2032.

Leverage and Debt Management

The aggressive expansion program will impact the company's leverage profile. Net debt-to-EBITDA is expected to rise from current levels of about 1.60 times in financial year 2025 to around 3.00 times by fiscal 2029, before moderating to approximately 1.60 times by fiscal 2031 as new capacities become operational and cash flows improve.

JM Financial's valuation methodology reflects confidence in the company's execution capabilities and improving EBITDA per MW metrics, warranting a premium to the historical trading multiple of around 10 times trailing EV/EBITDA over the past five years.