Adani Green falls 5% as merchant power deal shifts value to AESL
Adani Green Energy posted a 19% jump in quarterly profit and reached 20 GW of operational capacity, but its stock fell as analysts flagged a structural deal that transfers future upside to sister company Adani Energy Solutions.
Shares in Adani Green Energy fell more than 5% on Thursday to an intraday low of ₹1,392.35, bucking the trend set by the company's strong first-quarter earnings. The renewable energy developer reported a 19% year-on-year increase in consolidated net profit to ₹845 crore for the quarter ended June 2026. Revenue from operations rose 16% to ₹4,663 crore.
The underlying operational metrics underscored the scale of the company's expansion. Power supply EBITDA surged 33% to ₹4,122 crore, pushing the EBITDA margin to 94%. This operational leverage was driven by a 27% jump in renewable energy capacity, which crossed the 20,142 MW milestone, alongside a 30% increase in energy sales.
Despite these figures, the market focused on a structural shift in how the conglomerate monetizes its assets. Adani Green has allocated its entire 4 GW of operating and planned merchant generation capacity, plus 10 GWh of battery storage capacity due this year, to Adani Energy Solutions under long-term fixed-tariff agreements.
Analysts warned that this arrangement dilutes the earnings potential for Adani Green shareholders. JM Financial, which maintained its "ADD" rating, cut its target price to ₹1,549 from ₹1,622, noting the contracted portfolio sacrifices arbitrage gains and reduces earlier EBITDA estimates by 3% to 5%. Bernstein kept its "Underperform" rating, arguing that a meaningful portion of future value creation from these assets has shifted to the sister firm.
The sell-off pulls the stock down 7% over the past month, though it retains an 82% gain over six months. Chief Executive Ashish Khanna noted that near-term headwinds from power curtailment, which reduced EBITDA by 5% to 7% this quarter due to inadequate transmission infrastructure, should ease soon. "Gradually, as and when more transmission lines are going to come up, we do foresee these tendencies of curtailment to weed out," Khanna said, adding he expects no curtailment from Khavda by year-end.
Looking ahead, the company is pressing forward with its 30 GW renewable energy project at Khavda in Gujarat, where operational capacity reached 10.3 GW in June. Khanna noted that as renewable penetration increases, energy storage will become increasingly important for round-the-clock power reliability. To support this, the company has operationalised 1,972 MWh of battery storage at Khavda, taking its total installed storage capacity to 3,551 MWh as it targets over 10 GWh in the current financial year.
