Stocks To Buy: Motilal Oswal 'bull case' sees 47% upside for this Adani Group share

Shares of Adani Power Ltd. gained on Thursday, September 3, after brokerage firm Motilal Oswal initiated coverage on the stock, indicating an upside of 20% from its previous close.

Motilal Oswal has initiated coverage with a "buy" rating on Adani Power with a target price of ₹250 per share.

The brokerage chose to initiate with a "buy" rating on Adani Power due to its:

• Ambitious growth plans, with plans to increase capacity by 2.3 times to 42 GW by FY32.


• Solid execution track record demonstrated by acquisition and turnaround of multiple distressed plants.


• Optionality from nuclear foray and limited competition in the thermal segment.

Motilal Oswal said Adani Power is India's largest private thermal power producer with a capacity of 18 GW in the first quarter of the financial year 2027, accounting for 24% of private and 8% of aggregate coal and lignite-based capacity in India.

Adani Power sells power under long / medium-term power purchase agreements (PPAs) with DISCOMs with 95% of its operational capacity tied up, as well as through merchant contracts, Motilal Oswal said.

The brokerage values Adani Power at 16 times its estimated financial year 2029 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA). The sum of these contributions, adjusted for net debt, results in the target price of ₹250.

It said Adani Power currently trades at an estimated FY29 enterprise value (EV)/EBITDA of 13.8x. The brokerage said it builds an EBITDA compound annual growth rate (CAGR) of 21% estimated over FY29, a profit after tax (PAT) CAGR of 9% over FY26-29 and capacity additions of 1.3 GW, 1.6 GW and 3.2 GW in FY27, FY28 and FY29, respectively.

The brokerage added that Adani Power's substantial valuation premium over its peers such as NTPC and JSW Energy is a function of:

• Superior capital allocation with an average acquisition cost of ₹3.5 crore per MW, significantly below the greenfield thermal plant cost of ₹12 crore.


• Strong growth trajectory with EBITDA potential of ₹80,000 crore post completion of the current capex cycle.


• Optionality from forays into nuclear.

Bull case scenario

In a bull case scenario, Motilal Oswal has a target price of ₹305 per share, an upside of 46.8% from its previous closing price.

It anticipates a 10% higher merchant realization / unit in the FY27. FY28, FY29 compared to the base case over the same period. It also anticipates a 5% higher plant load factor (PLF) in the Mundra plant in the three fiscal years compared to the base case over the same period.

In this scenario, the brokerage increases the valuation multiple for the thermal generation business to 18x its FY29 EBITDA, while the base case is 16x.

Bear case scenario

In a bear case scenario, the brokerage has a target price of ₹140 per share, implying a downside of 32.6% from its previous close.

In this case, Motilal Oswal anticipates a 15% lower merchant realization/unit in FY27, FY28 and FY29 compared to the base case over the same period.

It anticipates a 5% lower PLF in the Mundra plant in the three financial years compared to the base case over the same period.

The bear case reduces its valuation multiple for the thermal generation business to 11x FY29 EBITDA, whereas the base case is 16x.

Key risks

Motilal Oswal mentioned the following key risk for Adani Power:

• As much as 44% of the upcoming thermal capacity is untied, leaving the company exposed to demand uncertainty.


• Adani Power remains exposed to competition in the power sector, where the presence of multiple competitors can drive down project return


• A slowdown in tendering activity can impact future capacity addition outlook for the firm.


• Adani Power has large capex commitments, delays or cost overruns can hurt its cash flows and returns.


• The company must adhere to strict environmental regulations, as failure to manage emissions, water usage, and waste effectively could result in penalties and legal issues, Motilal Oswal said.

Stock reaction

Of the 10 analysts who have coverage on the Adani Power stock, nine have a "buy" rating and one has a "hold" rating.

Shares of Adani Power are trading 1% higher on Thursday at ₹209.65. The stock has risen 41% so far in 2026.

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