Adani Power Stock Outlook: Morgan Stanley Predicts 65% Upside in Bull Case
With an overweight recommendation, Morgan Stanley began covering Adani Power’s shares, pointing to its growing market dominance and positive regulatory decisions.
Under the basic case, the international brokerage set a target price of ₹818 per share, which represents an increase of about 30% from Thursday’s close. Following the market regulator’s rejection of all claims of stock manipulation and accounting problems made by Hindenburg Research, the shares are up more than 7% on Friday.
With a 41.9 gigawatt (Gw) portfolio, 2.5 times its fiscal 2025 level, Adani Power is expected to increase its 8 percent share in coal generation and capacity to 15% by fiscal 2032, according to Morgan Stanley.
The power producer has addressed the majority of regulatory concerns, according to the brokerage. According to Morgan Stanley, it has a healthy financial sheet with a predicted net debt-to-Ebitda ratio of 1.5x in fiscal 2025 and aims to spend $27 billion on capital expenditures for 23.7 Gw of additions, of which 60–65% will come from internal accruals.
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It stated that a reduction in the merchant portfolio from the present 20% would offer more upside, while timely project execution, power purchase agreements, and increased profitability in the recently purchased 2.9 Gw plants might further raise earnings.
Morgan Stanley set a target price of ₹1,041 (65% upside) in its bull case scenario, assuming the business ties up all of its current and under-construction merchant capacity.
For power purchase agreement (PPA) capacity, the brokerage model accounts for a 70% plant load factor, with an EBITDA per unit of ₹2.1 for current capacity and ₹3.5 for new PPA capacity. This corresponds to a compound annual growth rate (CAGR) of 20% for EBITDA for fiscal 2025–28 or 18% for fiscal 2025–33.
Coal is still essential to India’s energy security, according to Morgan Stanley, but nuclear power is anticipated to play a significant role in the coming ten years. With the help of a PPA pipeline worth more than 20 GW, India intends to increase its coal capacity by 80 Gw by fiscal 2032, according to the brokerage.
After the Sebi order, Adani Group stocks rose.
The Securities and Exchange Board of India dismissed the current actions against group firms Adani Ports, Adani Power, and their chairman Gautam Adani on Thursday, clearing the Adani Group of accusations brought by the US-based short-seller Hindenburg Research.
Adani Enterprises, the flagship firm of the Adani Group, saw a 5% increase in stock price on Friday morning. Adani Power and Adani Ports, which were given a clean sheet by Sebi, increased by 8% and 3%, respectively.
History of Adani Power’s share price
According to Bloomberg, the company’s shares increased for the second day in a row and are now trading at 6.9 times the typical 30-day trading volume. This year, the counter has increased by 27%, while the benchmark Nifty 50 has advanced by 7.5%. The overall market value of Adani Power is ₹2.6 trillion.
Read Also: Today’s Adani Power Share Price Record Date: All You Need to Know About the Stock Split
FAQ: Morgan Stanley’s ‘Overweight’ Rating on Adani Power
Q1. What rating has Morgan Stanley given Adani Power?
Morgan Stanley has initiated coverage on Adani Power with an ‘Overweight’ rating, citing its growing market dominance, strong financials, and positive regulatory environment.
Q2. What is Morgan Stanley’s base case target price for Adani Power?
The brokerage set a base case target of ₹818 per share, representing an upside of around 30% from Thursday’s closing price.
Q3. What is the bull case target for Adani Power?
In its bull case scenario, Morgan Stanley projects a target price of ₹1,041 per share, implying a potential 65% upside if all merchant capacity is tied up and executed efficiently.
Q4. Why did Adani Power’s shares rally recently?
Shares rose after SEBI dismissed allegations of stock manipulation and accounting irregularities made by Hindenburg Research. Adani Power’s stock surged over 7% on Friday following the ruling.
Q5. What role does Adani Power play in India’s power sector?
Adani Power currently has a 41.9 GW portfolio, expected to grow significantly by FY2032. Its share of coal-based power generation is projected to rise from 8% to 15% in the same period.
Q6. What are Morgan Stanley’s financial projections for Adani Power?
Net debt-to-EBITDA ratio: 1.5x in FY25
Capex plan: $27 billion for 23.7 GW of additions, with 60–65% funded through internal accruals
EBITDA growth: 20% CAGR for FY25–28 and 18% CAGR for FY25–33
Q7. How does the power purchase agreement (PPA) capacity affect earnings?
Morgan Stanley assumes:
70% plant load factor for PPA capacity
EBITDA per unit of ₹2.1 for existing capacity and ₹3.5 for new capacity
These factors are expected to drive strong long-term profitability.
Q8. What are the key risks to Adani Power’s growth?
Delays in project execution
Challenges in securing PPAs
Profitability risks in newly acquired plants
Regulatory or market fluctuations in coal power demand
Q9. How has Adani Power performed in 2025 so far?
Stock up 27% YTD, compared to 7.5% gain in Nifty 50
Trading volume surged to 6.9x the 30-day average
Current market cap stands at ₹2.6 trillion
Q10. What’s the long-term outlook for India’s energy sector, according to Morgan Stanley?
Coal will remain crucial for India’s energy security, but nuclear power is expected to gain importance in the next decade. India plans to expand coal capacity by 80 GW by FY2032, with Adani Power playing a leading role.
Q11. Why did Morgan Stanley turn bullish on Adani Power now?
The brokerage cited three key reasons:
Regulatory clarity after SEBI cleared Adani Group of Hindenburg allegations.
Strong growth pipeline, with capacity set to more than double by FY2032.
Healthy balance sheet, with debt under control and strong internal cash flow generation.
Q12. How does Adani Power compare to peers in the power sector?
Adani Power leads in private-sector thermal generation capacity. Its aggressive expansion plan positions it ahead of state-owned NTPC and private peers like Tata Power in terms of future coal-based generation share.
Q13. What does “Overweight” rating mean?
“Overweight” means Morgan Stanley expects Adani Power to outperform the average return of other stocks in the same sector or market index over the medium-to-long term.
Q14. What is the significance of the ₹27 billion capex plan?
This massive investment will add 23.7 GW of new capacity, ensuring Adani Power nearly doubles its market share by FY2032. Importantly, 60–65% of funding will come from internal accruals, reducing reliance on debt.
Q15. How much of Adani Power’s revenue currently depends on merchant power sales?
Around 20% of Adani Power’s portfolio is merchant-based. Morgan Stanley suggests reducing this reliance and securing long-term PPAs could unlock additional upside potential.
Q16. What role do PPAs play in Adani Power’s profitability?
Long-term Power Purchase Agreements (PPAs) provide predictable cash flows, lower risk, and stable margins. With a 20 GW PPA pipeline, Adani Power is set to secure higher EBITDA in future years.
Q17. Why is coal still relevant in India’s power strategy despite renewables?
Coal continues to be India’s primary energy source, ensuring base-load stability as renewable sources like solar and wind are intermittent. Morgan Stanley estimates India will expand coal capacity by 80 GW by 2032, with Adani Power benefiting directly.
Q18. How does nuclear energy fit into the picture?
While coal dominates the near term, Morgan Stanley notes that nuclear power will gain importance in the coming decade, diversifying India’s energy mix.
Q19. What triggered the sharp rise in Adani Group stocks recently?
SEBI’s clean chit to Adani Group companies, dismissing Hindenburg’s allegations, boosted investor confidence. As a result:
Adani Enterprises rose 5%
Adani Power jumped 8%
Adani Ports gained 3%
Q20. What’s the overall market sentiment toward Adani Power now?
The sentiment has shifted from cautious to bullish. With a clean regulatory slate, strong expansion roadmap, and upside potential of 30–65%, investors are increasingly optimistic about Adani Power’s long-term value.
