Adani Power Hits Record High Amid Expansion Plans and Coal-Fired Power Interest

3 Apr 2024 , 01:46 PM

Adani Power Ltd’s shares hit a fresh record high on April 3, rising for the fourth consecutive session amid increased trading volumes.

The stock surged 3.49% to reach a record high of ₹609.00 on the BSE, marking an 18.4% increase over the past four trading sessions. It has seen a year-to-date jump of 15.3% and a remarkable 214% surge in the last one year.

Despite Adani Power’s market capitalization of ₹2.33 Lakh Crore, only one brokerage firm, Ventura Securities, covers the stock. It ranks 37th among all listed firms on the BSE, surpassing companies like JSW Steel, Tata Steel, Siemens, IRFC, Varun Beverages, Bharat Electronics, Grasim Industries Ltd, and Zomato in terms of market capitalization.

Adani Power’s subsidiary, Mahan Energen Ltd, recently signed a 20-year power purchase agreement with Reliance Industries for 500 MW. A 600-MW unit from MEL’s Mahan thermal power plant will serve as the captive unit for this agreement, out of its total capacity of 2800 MW.

In compliance with policy requirements, Reliance Industries will hold a 26% stake in the captive unit, involving an investment of ₹50 Crore for 5 Crore equity shares of MEL. This agreement represents an exclusive arrangement between the two companies for long-term power purchase of 500 MW by Reliance Industries.

Adani Power aims to expand its power assets by nearly 6 gigawatts (Gw) over the next five years, focusing on thermal power generated from coal to meet India’s increasing power demand.

Private Indian firms, including Adani Power, JSW Group, and Essar Power, have expressed interest in building approximately 10 gigawatts (GW) of coal-fired power capacity over the next decade, according to a report by Reuters. This indicates renewed private sector involvement in an industry previously experiencing minimal private investment. However, it may pose challenges to reducing carbon emissions, despite the Indian government’s goal of attracting private investment to increase coal-fired capacity by 80 GW by 2032.

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