Morgan Stanley has assigned an overweight rating to Adani Power with a target price of Rs 185. The firm expects the company to finalize full tie-ups for its 23.7 GW of capacity currently under construction by next year. In a parallel assessment, CLSA has retained an outperform rating on Dixon Technologies, setting a target price of Rs 18,800, even amidst concerns about the company’s future earnings. HSBC and Jefferies have also issued positive forecasts for Tata Steel and BPCL, respectively, underscoring strong growth potential and earnings outlooks. Citigroup has recommended a buy on IGL, highlighting improved volume prospects due to Delhi’s air pollution crisis.
Adani Power’s Growth Prospects
Morgan Stanley’s favorable outlook for Adani Power hinges on the company’s ambitious plans to achieve complete tie-ups for its 23.7 GW capacity under construction by next year. Analysts predict a reduction in the current united capacity from 10% to a more manageable 3-4%. They project that, at current tariff rates, Adani Power’s EBITDA could reach Rs 3.7 per unit for new bids. The company’s capital expenditure currently ranges from Rs 95-100 million per megawatt, which is significantly lower than the average Rs 150 million per megawatt of its peers. This cost advantage stems from the company’s strategy of procuring advanced equipment and executing projects efficiently.
Dixon Technologies Faces Challenges
CLSA has upheld an outperform rating on Dixon Technologies, with a target price set at Rs 18,800. However, analysts have raised concerns regarding future earnings per share (EPS) for FY27. The anticipated joint venture with Vivo, expected to contribute 20 million units to smartphone volumes, is still pending approval. Additionally, Dixon Technologies has yet to secure the necessary approvals for establishing component facilities under the government’s Electronics Component Manufacturing Scheme (ECMS). The uncertainty surrounding medium-term growth prospects is troubling for analysts, especially as the stock trades at a high multiple of 44 times earnings amid substantial delays in Vivo’s operations.
Tata Steel and BPCL Show Positive Outlooks
HSBC has issued a buy recommendation for Tata Steel, targeting a price of Rs 215. Analysts view the revival of capital expenditure in India as a positive sign for the steel industry and Tata Steel. The company is also involved in multiple expansion projects across India, further enhancing its growth prospects. While short-term earnings may face pressure, analysts anticipate that the introduction of safeguard duties will provide additional support. Similarly, Jefferies has maintained its buy rating on Bharat Petroleum Corporation Limited (BPCL), raising the target price from Rs 430 to Rs 435. The company is well-positioned to capitalize on refining strength, backed by a strong earnings outlook as crude oil prices stay below $70 per barrel.
IGL’s Position Amid Air Pollution Crisis
Citigroup has recommended a buy on Indraprastha Gas Limited (IGL), setting a target price of Rs 260. Analysts note that Delhi’s ongoing air pollution crisis is pushing the demand for clean energy solutions, positively affecting IGL’s volume prospects. Concerns about the transition to electric vehicle (EV) cabs in Delhi are easing as the government takes a more practical approach, including plans to revise the vehicle aggregator scheme for more flexible transition timelines. Consequently, IGL is expected to benefit from improved market conditions and regulatory support in the coming years.
Digihunt is not a financial advisor and this is not investment advice.