Updated on: 2026-02-05 As of: 2026-02-05 Latest price: Rs 1,020 (NSE) as of 2026-02-04 close Market cap: Rs 1,62,000 crore Latest earnings period: 9M FY26 (ended Dec 31, 2025) Key sources: https://www.adanigreenenergy.com/newsroom/media-releases/adani-green-energy-reports-37percent-yoy-growth-in-energy-sales-during-9m-fy26; https://www.marketsmojo.com/news/stocks-in-action/adani-green-energy-ltd-reports-sharp-decline-in-quarterly-performance-amid-negative-financial-trend-3804861

Event: Adani Green reported Q3 FY26 results on Jan 23, 2026, with revenue up 21% YoY to Rs 2,420 crore but net sales down 14% QoQ to Rs 2,618 crore, alongside a net loss of Rs 30 crore and cash profit drop of 18% YoY. Date: 2026-01-23 Why the Market Reacted: Investors focused on 37% YoY energy sales growth to 27,636 million units and 48% capacity jump to 17.2 GW over 9M FY26, overshadowing QoQ weakness and margin pressures amid high debt servicing. Why This Is Not Just News: While headlines celebrate capacity milestones, this analysis tests if 90%+ EBITDA margins endure as debt scales with 5-7 GW annual additions, PPAs face tariff resets, and execution risks mount in Rajasthan/Gujarat sites—issues the trigger merely hints at.

AGEL's premium valuation hinges on flawlessly executing 45 GW by 2030 at 90% EBITDA margins, but this assumes stable PPAs, cheap debt, and no execution delays in a capital-intensive sector prone to regulatory shifts and Adani Group dependencies.

Adani Green Energy generates nearly all revenue from long-term power purchase agreements (PPAs) with DISCOMs and captive customers, selling solar and wind power at fixed tariffs averaging Rs 2.5-3/kWh over 25 years. Profits stem primarily from operational leverage: once capex-heavy assets (Rs 4-5 crore/MW) are built, opex remains low at Rs 0.2-0.3/kWh, yielding EBITDA margins of 90%+, far above thermal peers at 25-30%. Key segments are solar (70% capacity) and wind (25%), concentrated in high-irradiance Gujarat/Rajasthan sites like Khavda. However, cash flows are back-loaded—depreciation and debt service eat into PAT initially, with cash profit (PAT + dep) turning positive only post-stabilization. The model depends on greenfield execution: acquiring land (often via group entities), securing PPAs through SECI/GSR bids, and financing via hybrid debt (70% non-convertible debentures, 20% group loans, 10% equity). Revenue recognition follows Ind AS 115 on electricity sales, but risks lurk if PLF drops below 25-30% due to grid curtailments or dust. Unlike IPPs with merchant exposure, AGEL's 100% contracted book shields volumes but locks in tariffs vulnerable to resets. Sustainability falters if capex inflates 10-15% from supply chain issues or if RBI rate hikes push borrowing costs above 10%, eroding interest coverage below 1.5x. Group synergies aid speed but raise governance flags under SEBI scrutiny.

Revenue and EBITDA growth masks Q3 weakness (14% QoQ sales drop), with ROCE sliding to 7.42% as capex outpaces profits. Debt/equity at 4.52x remains manageable only if EBITDA covers interest at 1.32x; further capacity adds could strain unless refinancing at sub-9% rates.

Consensus fixates on AGEL's 5.6 GW CY25 additions (14% of India's RE installs) and 37% sales growth, but overlooks margin fragility as capacity scales. New PPAs increasingly via competitive bids (SECI reverse auctions) yield tariffs as low as Rs 2.3/kWh vs legacy Rs 3+, potentially dragging blended realization 10-15% lower by FY28 unless hedged by hybrids. Investors assume endless cheap debt from Adani infra finance and multilateral lenders, ignoring RBI's hawkish stance amid 7%+ inflation—yields on NCDs already touch 10.5%, and $250M foreign loan signals desperation post-DOJ overhang. Execution risks amplify: Khavda's 30 GW mega-site faces water scarcity, transmission bottlenecks (CTUIL delays), and land disputes, with historical slippages of 20-30% in timelines. Market ignores PPA concentration—60% with Rajasthan/Gujarat DISCOMs vulnerable to payment delays (average 120 days, per debtor turnover 6.26x). Group leverage creates circular risks: if Adani Enterprises stumbles, AGEL's off-take guarantees weaken. Non-consensus: at 17 GW, scale economies should boost ROCE to 12%+, but unless PLF hits 32% (vs 28% now), it stays sub-10%, eroding the 'growth at premium' narrative. Thesis fails if hybrid tariffs average below Rs 2.5/kWh or capex/MW exceeds Rs 4.5 crore.

At 45x EV/EBITDA, valuation bakes in 19% revenue CAGR and 50% EPS growth per analyst forecasts, assuming flawless 7 GW annual adds and 90% margins. Compression to 30x (peer avg) implies 30% downside unless FY26 EBITDA hits Rs 11,000 crore.

Base case assumes 90% execution on 45 GW target with 88% margins; bull needs policy tailwinds like faster RPO enforcement; bear triggers if 20% delays or tariffs fall 15%. Probability-weighted target: Rs 1,100 (8% upside), but bear skews downside risk.

• Financing costs spike above 10.5% on Rs 80,000+ crore debt, pushing interest coverage below 1.2x and forcing equity dilution.
• SEBI/RERC tariff regulations cap realizations or void legacy PPAs, with Rajasthan DISCOM defaults amid subsidy delays.
• Execution delays >20% on 30 GW Khavda due to grid evacuation lags (POSOCO constraints) or land acquisition hurdles, missing 45 GW target.

AGEL trades at 2-3x peer multiples on RE purity and scale, justified only if it delivers superior ROCE >12%; discount warranted if debt drags returns below NHPC's clean hydro profile.

• Q4 FY26 EBITDA margin and avg tariff realization per kWh (watch for bid erosion).
• Management guidance on FY26 capex (Rs 20,000 crore?) and debt refinancing terms amid RBI policy.
• SECI auction outcomes and RPO compliance by DISCOMs, plus Khavda grid connectivity milestones.

AGEL's thesis rests on converting 28 GW under-construction into cash-flowing assets at sustained 90% margins, but Q3 weakness exposes execution and cost risks that could cap ROCE at sub-10% despite scale. Market prices perfection—25% revenue CAGR, cheap debt, no regulatory hiccups—but fragility looms if tariffs soften or interest rates linger above 9%. Downside skews higher: a 20% delay or 10% capex overrun triggers 30% valuation reset to 30x EV/EBITDA. Investors should track Q4 debt coverage, PPA renewals, and Khavda progress; unless these affirm base case, premium erodes. This remains a high-conviction growth play only for those stress-testing Adani-specific risks in India's RE boom.