Global rating agency Morgan Stanley on Thursday reiterated an ‘Overweight’ (OW) rating on Adani Power Ltd (APL), citing a stronger project pipeline, improving earnings visibility, and a robust balance sheet. The U.S.-based brokerage firm also raised its target price to ₹185 from ₹163.60 earlier.

Despite the positive rating, shares of Adani Power declined as much as 3.75% to hit an intraday low of ₹152.50 on the BSE, while its market capitalisation slipped to ₹2.97 lakh crore.

In its report, the brokerage highlighted that APL has won power purchase agreements (PPAs) and letters of award (LoAs) totalling around 6.7 gigawatts (GW) in the past three months, taking its total PPA pipeline to about 22 GW. This, it said, significantly strengthens the company’s under-construction merchant capacity.

“We reiterate our Overweight stance and forecast an EBITDA CAGR of 20% over FY25–33, up from 16% previously,” Morgan Stanley said in its report.

Morgan Stanley noted that Adani Power remains a key driver of India’s energy security, given its strong project execution record and rising capacity addition. APL is India’s largest independent power producer (IPP) and second-largest thermal developer after NTPC, with its market share expected to rise to 15% by FY32, backed by a total portfolio of 41.9 GW — more than double its FY25 capacity.

The report also stated that APL continues to benefit from favourable regulatory developments and a robust demand outlook in India’s power sector.

It further mentioned that recent PPAs were signed at a fixed charge of approximately ₹4–₹4.5 per kWh, which improves EBITDA predictability. The average tariff of the new agreements is ₹5.8–₹6.2 per unit, with a higher capacity charge, enabling Adani Power to generate an average EBITDA of around ₹3.5 per kWh, compared to ₹2.5 for merchant operations.

The brokerage expects stronger cash flow visibility going forward, supported by the company’s growing PPA portfolio and favourable bid wins in recent auctions.

As per the report, Adani Power’s current bid pipeline stands at 22 GW, up from 17 GW earlier, including signed PPAs for Bitibori (500 MW) and Pirpanti (2.4 GW), and LoAs for Raipur (570 MW) and Anuppur (1.6 GW). Morgan Stanley views APL’s bidding performance as one of the strongest in the sector and expects additional PPAs to be added soon.

The company also has a 23.7 GW under-construction pipeline, which would require about $2.7 billion (₹22,000 crore) of capex over FY26–32. Morgan Stanley estimates that 60–65% of this capex could be met through internal accruals, maintaining a healthy balance sheet with a net debt-to-EBITDA ratio of 1.5x by FY25-end.

The brokerage raised its EPS estimates by 2% for FY26 and FY27, and 3% for FY28, reflecting the contribution of new PPAs and LoAs. It also expects Adani Power’s EBITDA CAGR to improve to 20% for FY25–33, assuming continued execution of existing and upcoming projects.

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