The Adani Group’s power transmission utility is presently esteemed at enterprise level to be worth $18.5 billion. According to a recent report that was conducted, it indicated the company was bound for very big growth and poised to forecast a 29% compounded yearly growth rate (CAGR) in pre-tax profits over the next three years.
A varied portfolio AESL that encompasses transmission and distribution assets along with its smart metering business. According to Cantor Fitzgerald, it’s a global brokerage that initiated coverage of the company recently. AESL is found to be an attractive investment option in India’s rapidly expanding energy sector. This will witness the brokerage project’s total revenue growth at 20% CAGR from FY24 to FY27, while adjusting EBITDA is expected to grow at an impressive CAGR of 28.8%. This way, the growth of Kotak is far exceeding its peers in both the utility and energy space that are witnessing low single-digit revenue growth along with mid-single-digit EBITDA growth.
Transmission should be strong at AESL; with nine newly awarded projects, completed in the next 18-24 months, should bode well. The distribution business is expected to grow at nearly double-digit rates and is benefiting from an expanding regulatory asset base. Further, AESL’s smart metering business is at the doorsteps of huge revenues with a backlog of 22.8 million smart meters that can earn it an income as well as future contracts for another 40 million smart meters.
The underdeveloped energy infrastructure in India and a rising electricity demand due to a burgeoning population and accelerating electrification are the main reasons for such outperformance of AESL with its peers. Having recently tapped capital, which was three times oversubscribed, AESL is now well-placed to drive growth across all its key segments.
AESL was well-known in 2015 through the demerger of transmission assets from Adani Enterprises. Subsequently, AESL expanded across all spectrum through acquisitions and new business lines and rebranded itself to reflect broader capabilities. As India finally invests heavily into renewable energy, efficient transmission and distribution infrastructure would increasingly be required, which would put AESL well in the energy market.
