ADANIGREEN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.8

📊 Core Financials

• Revenue & Profitability: PAT surged from 69 Cr. to 475 Cr. (Qtr Var +309%), but sustainability remains uncertain.
• Margins: ROE at 9.41% and ROCE at 8.87% reflect weak efficiency compared to peers.
• Debt: Debt-to-equity ratio of 1.18 indicates high leverage, raising financial risk.
• Cash Flow: Dividend yield is 0.00%, with no direct shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 139 vs Industry PE of 26.7 — extremely overvalued.
• P/B Ratio: Current Price 1,022 ₹ vs Book Value 89.8 ₹ → ~11.4x, expensive.
• PEG Ratio: 1.24, suggesting valuation is not fully justified by growth.
• Intrinsic Value: Current valuation far exceeds fundamentals, leaving limited margin of safety.

🏢 Business Model & Competitive Advantage

• Adani Green operates in renewable energy, focusing on solar and wind power generation.
• Competitive advantage lies in scale, government-backed projects, and integration within the Adani Group ecosystem.
• However, profitability metrics remain weak, limiting long-term resilience unless margins improve.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive only near 750–850 ₹ range, closer to intrinsic fair value and below DMA 200.
• Long-Term Holding: High-risk investment at current valuations; suitable only for aggressive investors betting on renewable energy growth.

✅ Positive

• Quarterly PAT growth (+309%) highlights strong operational momentum.
• DII holdings increased slightly (+0.12%), showing domestic institutional support.
• Exposure to renewable energy sector with long-term demand potential.

⚠️ Limitation

• Extremely high P/E (139) compared to industry average (26.7).
• Weak ROE (9.41%) and ROCE (8.87%).
• High debt-to-equity ratio (1.18) raises financial risk.
• No dividend yield, limiting income appeal.

📉 Company Negative News

• FII holding reduced by -0.29%, showing declining foreign investor confidence.
• MACD (-7.43) and RSI (44.7) indicate weak technical sentiment.

📈 Company Positive News

• PAT improved significantly quarter-on-quarter.
• DII holdings increased slightly (+0.12%).
• Stock trading near DMA 50 & DMA 200, showing technical support.

🌐 Industry

• Industry PE at 26.7, much lower than Adani Green’s valuation.
• Renewable energy industry benefits from government incentives, climate goals, and rising demand for clean power.

🔎 Conclusion

• Adani Green is fundamentally weak with poor efficiency and extreme overvaluation despite strong PAT growth.
• Current valuations make entry unattractive, with high leverage adding risk.
• Best suited for accumulation only near 750–850 ₹ levels.
• Long-term holding is risky unless profitability stabilizes and earnings growth improves.