Adani Energy Solutions valued at $18.5 bn; revenue to grow 20%

NEW DELHI: Adani Energy Solutions Ltd, power transmission utility of the Adani group, is valued at USD 18.5 billion at enterprise level and a strong business growth is likely to propel a 29 per cent compounded growth in its pre-tax profits over the next three years, a report said.

AESL has a diversified portfolio that includes transmission assets, distribution assets, and a smart metering business.

“With an enterprise value of $18.5 billion, we believe AESL to be a very attractive way to play the rapidly expanding energy markets in India,” global brokerage Cantor Fitzgerald said, initiating coverage of the company.

It believes AESL offers growth unlike any other publicly traded utility/energy company across US, Europe, or Asia. “We forecast total revenue to grow at a CAGR of 20 per cent from FY24 to FY27 and adjusted EBITDA to grow at a CAGR of 28.8 per cent.” This compares to peers growing revenue at low single digits and EBITDA at mid-single digits.

Stating that it is growing meaningfully faster than its peers, the brokerage said it believes AESL is a more diversified business.

“We expect its transmission business will see strong growth as it completes the nine projects it has recently been awarded over the next 18-24 months (and we expect it to win more contracts over the coming years), its distribution business should be able to grow at/near double-digit rates as it continues to add to its regulatory asset base (RAB), and its smart metering business is just about to start generating meaningful revenue/profits as it works through its 22.8 million smart meter backlog (to generate $3.2 billion of income), and it could win another 40 million smart meters (which will add another $6 billion+ of income),” it said.