Adani Energy Solutions Ltd. (AESL), with its diversified portfolio that includes transmission assets, distribution assets, and a smart metering business, is poised to not only see robust growth over the next four years but also continue to outgrow peers for at least the next ten years, according to a new report by global brokerage Cantor Fitzgerald. This is because India is doubling down on electrification to connect more rural areas.

According to the analysis, the Adani Group company’s adjusted EBITDA is expected to rise at a CAGR of 28.8% and its total revenue is expected to expand at a CAGR of 20% from FY24 to FY27E.

According to Cantor’s research report, this contrasts to rivals expanding sales at low single-digit rates and EBITDA at mid-single-digit rates.

The international brokerage has set a target price for Adani Energy Solutions Ltd. of Rs 2,251 per share, up from Rs 979 (as of September 19).

The company’s shares were trading at a high of Rs 1,011.75 on Friday.

The research said that, with an enterprise value of $18.5 billion, “we believe AESL to be a very attractive way to play the rapidly expanding energy markets in India.”.

Across the US, Europe, and Asia, AESL provides growth unmatched by any other publicly listed utility or energy firm.

“We expect its transmission business will see strong growth as it completes the nine projects it has recently been awarded over the next 18-24 months (and we expect it to win more contracts over the coming years),” the note said. The company’s smart metering business is about to start making significant revenue as it works through its 22.8 million smart meter backlog (to generate $3.2 billion of income), and it could win another 40 million smart meters (which will add another over $6 billion of income). The company’s distribution business should be able to grow at/near double-digit rates as it continues to add to its regulatory asset base (RAB).

The transmission and distribution companies of AESL will profit as the nation grows and requires more power.

Furthermore, after a recent capital offering that was significantly oversubscribed by three times, the business has enough funding to support expansion in each of its three main business divisions.

“We believe shares are attractive at current levels,” the report states. Shares presently trade at a 60% discount to peers on a growth-adjusted basis, but in our opinion, they should trade at an even multiple, if not a premium.”

AESL is now engaged on nine other transmission-related projects, which it anticipates completing within the next 18 to 24 months. With the aid of these initiatives, operating income is expected to increase at a compound annual growth rate (CAGR) of 20.7%, from Rs 4,045 crore in FY24 to Rs 7,000 crore in FY27.

Based on its regulatory asset base (RAB), which was Rs 8,485 crore (as of Q1 FY25), AESL is profitable. The corporation plans to increase its RAB by Rs 1,000 crore, with high teens to 20 percent expected in returns on further RAB additions.

“We think this investment tempo may continue for many years to come, especially in India’s still-developing economy. Theoretically, AESL’s distribution EBITDA should rise by Rs 200 crore for every Rs 1,000 crore increase in RAB, per the Cantor report.

In the meantime, by 2025–2026, 250 million homes must have smart meters, according to government regulations. This will provide the utilities with insights on peak customer demand and consumption patterns, assisting the government in reducing energy loss.

Thus far, Adani Energy Solutions has been granted contracts for nine projects totaling 22.8 million smart meters, or 20.2% of all smart meters awarded. “We believe AESL will be able to maintain its 20 percent-plus market share, which would translate into 60 million smart meters and ultimately over $9.5 billion of income over the next 8-9 years,” the note said.