The brokerage has maintained a ‘Buy’ rating on Adani Energy Solutions with a price target of Rs 1,665, implying an upside of about 10% from current levels. For Power Grid Corp, Jefferies has assigned a target price of Rs 340.
According to Jefferies, Adani Energy Solutions is India’s only listed private-sector pure-play transmission and distribution company and is well placed to benefit from a robust transmission investment cycle. The brokerage highlighted that the company’s near-term bid pipeline stands at Rs 1.5 lakh crore, nearly three times the Rs 54,000 crore pipeline at the end of FY25. The company is currently executing transmission projects worth Rs 71,800 crore, up 20% year on year.
The key differentiator, according to Jefferies, is growth. The brokerage expects AESL to deliver an EBITDA CAGR of 27% and a PAT CAGR of 19% between FY26 and FY30, driven by execution of its transmission portfolio and smart meter roll-out. In comparison, Power Grid’s EBITDA and PAT are projected to grow at 13% and 8%, respectively, over the same period.
Jefferies also believes valuation is becoming more attractive. It noted that AESL’s valuation premium to Power Grid has narrowed sharply to 133% from 991% in January 2023, even as execution momentum remains strong.
Smart metering remains another major growth driver. Jefferies noted that AESL had installed 11.4 million smart meters by the end of FY26, compared with 3.1 million a year earlier. The company is currently executing smart meter projects worth Rs 29,500 crore, covering around 24.6 million meters. It added 8.2 million meters in FY26, exceeding management’s target of 7 million. The brokerage expects further scale-up, with its FY27 to FY29 estimates factoring in installations eventually reaching 11 million meters.
The brokerage pointed out that nearly 100 million smart meter bids are still pending under the government’s 250 million smart meter target, providing a sizeable opportunity. Upcoming tenders are expected from Karnataka, Tamil Nadu, Telangana, Madhya Pradesh, Gujarat and Andhra Pradesh.Beyond transmission and smart meters, Jefferies sees optionality from emerging businesses. Management indicated that cooling solutions and commercial and industrial energy solutions are still at an early stage, but the opportunity is significant, particularly with data centres expected to become a meaningful source of demand.
The brokerage is also constructive on the company’s balance sheet. AESL’s net debt to equity ratio stood at 1.8x as of March 2026. After raising $1 billion through a QIP in August 2024 at Rs 976 per share, the company is comfortable expanding its transmission gross block by 2.6 times between FY26 and FY30 while scaling its smart meter gross block to Rs 30,500 crore from Rs 6,400 crore at the end of FY26. Jefferies expects net debt to equity to remain below 3x despite the ongoing expansion.
The brokerage expects improving profitability as well. It forecasts return on equity moving closer to 13% over FY26 to FY30, supported by lower interest costs, commissioning of new assets and the absence of further equity dilution.
Jefferies noted that while AESL’s profits have risen 174% between FY23 and FY26, its market capitalisation remains 45% below January 2023 levels. The brokerage believes this leaves room for a potential re-rating, particularly after the Competition Commission of India dismissed a case against the Adani Group.
Its Rs 1,665 target price is based on 20x FY28 EV/EBITDA, representing a 14% discount to AESL’s 10-year average valuation multiple.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
