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Adani Power Fundamental Analysis

27 October 20226 mins read by Angel One
Adani Power stocks have generated multibagger returns for investors. Here is an Adani Power fundamental analysis to help you decide whether to buy the stock or not.
Adani Power Fundamental Analysis
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Adani Power Ltd. (APL) stocks have turned into a multibagger, generating a return of 950 percent in the last two years. Besides that, several other Adani Group companies have recorded impressive performance on the stock exchanges in the last 2-3 years, making Goutam Adani the second richest man in the world. 


In this article, we will analyse Adani Power fundamentals, Adani Power future plans, and the overall thermal power segment of India. 

Company background 

Adani Power is a part of the diversified Adani Group and the largest private player in the thermal power generation segment. Founded in 1996, the company has a total installed capacity of 12,450 MW in power plants in Gujarat, Maharashtra, Karnataka, Rajasthan, and Chhattisgarh and a 40 MW in solar power in the Gujarat project. 

It was the world’s first company to set up a coal-based supercritical thermal power project under the Clean Development Mechanism (CDM) and Kyoto Protocol. Their first power plant came up in Mundra, Gujarat. Being a part of the Adani Group, the company successfully leveraged its project management skills and experience to run its power plants successfully and efficiently. 

In 2019, Adani Power ranked at the 30th spot in ESG benchmarking by DJSI-S&P Global. They have a history of following the best corporate sustainability practices as a power company. Currently, APL and have five more power plants under construction.   

Thermal Power Industry Analysis 

India is the 3rd largest producer and consumer of electricity in the world. In the global ranking, India is the second largest producer of coal. The thermal power segment of the country managed to grow at 8.1 percent CAGR over the last decade, which helped India move to the 22nd position in 2020 from 115 in 2014 in the World Bank’s Ease of Doing Business – Getting Electricity ranking. 

The country has a total power generation capacity of 3,99,496 MW, and out of total energy production, coal-fired plants account for 53%, followed by renewable energy generation at 27%. Despite solid production numbers, India’s per capita annual power consumption of 1,276 in FY21 was lower than other developing countries like Brazil and South Africa. It indicates the power demand in India to grow at a robust pace prompted by the following factors. 

  • Increase in the living standards 
  • More penetration of electronics and electrical appliances, even in the rural sector 
  • Impetus from the government to boost the manufacturing sector 
  • Better irrigation through electrical pumps in the agricultural sector

Key metrics of Adani Power Ltd.

Following is an Adani Power fundamental analysis.

Current Market Price  Rs 338.00
Market Capitalisation Value  Rs 128,667.48 crore
Total Income Growth (%) 137.91
EBIT 7168.33 crore
EBIT Growth (%) 488.00
Revenue from operation 10,597 crore
Basic EPS  11.65
PAT (consolidated) 4,645.47 crore
PAT Growth (%) 2,026.17

The sharp jump in Adani Power’s performance is mainly due to increased demand for electricity in the country fueled by economic growth. The country’s aggregate energy demand during FY22 was 1380 billion units, an 8.2% growth over FY21.

APL Revenue and Net profit growth

Year  Revenue (in Rs crore) Net profit (in Rs crore)
2022 27,711 4,912
2021 26,221 1,270
2020 26,468 – 2,275
2019 23,884 -984
2018 20,304 -2,103

APL debt/equity ratio and profit margin 

Following is an analysis of the debt-to-equity position of the company in the last five years.

Year Debt/Equity NPM (%) OPM (%)
2022 8.89 17.73 35.66
2021 99.58 4.84 33.13
2020 -24.50 -8.60 21.66
2019 -151.14 -4.12 20.86
2018 55.23 -10.36 26.77

The negative debt-to-equity ratio indicates the company’s negative net worth in that year. 

Adani Power Ltd. – Competitive advantages

We have listed the competitive advantages of Adani Power Ltd. below. Comparative advantages help investors to compare a company against its peers.

  • APL has extensive experience managing logistics involving the multi-point operation of handling 13000 railways each year.
  • The Adani Power plants enjoy the advantages of easy access to fuel and market connectivity. 
  • The company enjoys long-term fuel supply agreements with domestic coal companies, which cover 73 percent of its demand.
  • The company is financially and fundamentally robust to safeguard its future revenue. 
  • Various PPAs of APL have fuel-cost pass-through to power companies. Hence, if imported coal prices rise, the company will pass the extra expenses to power distribution agencies. 

Let’s look at Adani Power future growth prospects. 

  • The company’s 1,600 MW power plant is underway in Bangladesh. The unit will supply power to the country.
  • In March 2022, APL proposed merging six of its subsidiaries, resulting in improved ROE, better access to the debt market and scale economics.
  • In August 2022, the company purchased DB Power, located in Chhattisgarh, for Rs. 7,017 crores. The company is a 2×600 MW thermal power plant.


Investors must note that despite rising revenue, the company’s earnings stayed volatile primarily due to weak coal production and the rising cost of imported coal. Furthermore, one can’t turn a blind eye to the mounting debt amount of the organisation. Adani Power’s future growth will depend on the company’s ability to meet its debt obligations successfully. Only time will tell whether or not APL will sustain its rally in the coming days. But investors may approach the stock with caution. 

Disclaimer: “This blog is exclusively for educational purposes and does not provide any advice/tips on Investment or recommend buying and selling any stock.”

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