3 Reasons Why Adani Power Shares Are Rising?

Adani Power’s stock has been gaining attention in the markets, and the rally isn’t without reason. The share price rose more than 4% today, further fueling optimism among investors. The company has made some big moves recently, and its fundamentals suggest that the momentum could sustain. Here are the three main reasons why investors are bullish:

1. Strategic Bhutan Hydropower JV

Adani Power has signed a Shareholders Agreement (SHA) with Bhutan’s state-owned Druk Green Power Corporation (DGPC) on September 5, 2025. The project will be executed by a new public company in Bhutan with a 49:51 shareholding (APL:DGPC).That means Adani will own 49% of the project company, while DGPC will hold the controlling stake at 51%.

Project Details

• Project: 570 MW Wangchhu hydroelectric project (peaking run-of-river).
• Location: Wangchhu, Bhutan.
• Model: BOOT (Build, Own, Operate, Transfer).
• Investment Size: About INR 60 billion (₹6,000 crore).
• Timeline: Construction to begin in 2026 and complete by 2031.

Capital Structure

• Initial share issue: APL (4.9 million shares), DGPC (5.1 million shares), priced at BTN 100 each.
• Board representation: Each party to appoint 3 directors.
• Rights: Pre-emptive rights, restrictions on transfer, and non-compete clauses.

Strategic & Economic Impact

• For Bhutan: Meets peak winter demand, exports surplus power to India in summer, supports the national target of 15,000 MW hydro and 5,000 MW solar by 2040, strengthens grid connectivity with India, and contributes to Bhutan’s long-term goal of becoming a high-income nation.
• For Adani Power/India: Secures renewable energy imports, deepens India–Bhutan energy partnership, and expands APL’s clean energy portfolio beyond thermal power.

Forward Outlook

The Wangchhu project is the first under a broader MoU signed in May 2025 between Adani Group and DGPC to develop 5,000 MW of hydropower in Bhutan. It signals more collaborations and scaling opportunities in the future.

Risks & Considerations

• Execution delays due to terrain and regulatory clearances.
• Heavy upfront investment with recovery dependent on timely commissioning.
• Geopolitical sensitivities, though India–Bhutan ties remain strong.

2. Expansion and Growth Moves

On the thermal side, the company has secured new long-term Power Purchase Agreements (PPAs) in states like Bihar, Madhya Pradesh, Uttar Pradesh, and Maharashtra. These ensure predictable cash flows and steady demand for its power plants.

Adding to this, the company recently announced a 1:5 stock split, making shares more affordable for retail investors and improving liquidity in the market.

3. Strong Fundamentals Back the Rally

Adani Power’s latest Investor Presentation (September 2025) highlighted a series of strong performance metrics:

• Plant Load Factor (PLF) improved from 48% in FY23 to 71% in FY25, showing higher utilization of its plants.
• Plant availability remained strong at around 91%, proving reliability of operations.
• EBITDA margins stood at 38-41%, among the best in the industry.
• The company reduced its net debt-to-EBITDA ratio to 1.78x by June 2025, reflecting a healthier balance sheet.
• It also achieved AA/Stable credit ratings, boosting investor confidence.

These indicators show that Adani Power is not only expanding, but also running more efficiently and profitably than before.

Key Takeaways for Investors

• Balanced Growth Strategy: Adani Power is hedging its bets by expanding in renewables (hydro) while also strengthening thermal capacity. This mix helps ensure both sustainability and profitability.
• Stock split (1:5) improves liquidity and attracts retail investors.
• Fundamentals are strengthening: PLF at 71%, plant availability at 91%, EBITDA margins near 40%, and balance sheet leverage at just 1.78x.
• The Bhutan hydropower JV diversifies the company into clean energy while strengthening India–Bhutan energy relations.
• Long-Term Outlook: With both domestic and international projects in the pipeline, Adani Power is positioning itself as a key energy player in South Asia. However, investors should also keep an eye on execution risks (delays, regulatory clearances) and high capex requirements that may impact near-term profitability.

Disclaimer

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