Adani Green Energy (AGEL)Gains 1% as Parent Group Plans $1 Billion Investment into Renewable Arm

Manoj Prasad

Adani Green Energy Ltd (AGEL) shares gained nearly 1 percent in early trade on December 22, after reports emerged that parent Adani Group is planning a $1 billion capital infusion into its renewable energy business.

The proposed investment comes as AGEL aims to rapidly expand its clean energy capacity in line with India’s ambitious renewable energy goals, while also facing debt maturities in 2023.

Adani Group Looking to Invest $1 Billion into AGEL

According to a recent Bloomberg report, billionaire Gautam Adani and his family intend to inject $1 billion into AGEL in the form of preferential equity shares.

The capital injection would provide funding for AGEL’s growth plans as well as to potentially refinance maturing debt. AGEL has $1.2 billion in bonds set to mature next year.

The proposed investment is part of the Adani Group’s massive push into renewable energy to capitalize on India’s fast-growing clean energy market.

AGEL Expanding Rapidly to Meet India’s Green Goals

AGEL has grown swiftly into India’s largest renewable energy company, aligned with the country’s ambitious renewable energy target of 500 gigawatts by 2030.

Earlier this year, AGEL outlined plans to boost its renewable capacity over eight-fold to 45 gigawatts by 2030. To aid its exponential growth, AGEL has been acquiring renewable energy assets and forming partnerships with global players like TotalEnergies.

The proposed $1 billion capital infusion from the Adani family will provide further growth capital to fund AGEL’s expansion strategy. Besides organic growth, AGEL is also said to be eyeing acquisitions to accelerate capacity additions.

Stock Gains 1% on Funding Plans

AGEL shares opened higher by nearly 1 percent on December 22 following the news of the potential $1 billion investment.

The stock had surged 4 percent in the previous session following the initial Bloomberg report regarding the capital injection plans.

At 3:30 AM on December 22, AGEL shares closed at Rs 1,527.85 on the National Stock Exchange, up 0.5% from the previous close.

The latest gains build on a recent rally in AGEL stock, which has surged over 55 percent year-to-date in 2022 amid strong expansionary plans.

Two New Subsidiaries Incorporated

Separately, earlier last week on December 15th AGEL announced the incorporation of two new wholly owned subsidiaries – Adani Renewable Energy Fifty Six Ltd and Adani Renewable Energy Fifty Seven Ltd.

The newly formed subsidiaries each have an authorized and paid-up capital of Rs 1 lakh.

As per AGEL’s regulatory filing, the key objective of the subsidiaries is to pursue renewable energy business including generation, development, transformation, distribution, transmission and sale of wind and solar power.

The formation of new subsidiaries is viewed as a preparatory step by AGEL before it acquires new renewable energy assets or undertakes greenfield project development.

Outlook for AGEL

With ambitious capacity expansion plans backed by the financial muscle of parent Adani Group, AGEL is expected to maintain strong growth momentum.

The proposed $1 billion capital infusion by the Adani family will provide added resources to fund AGEL’s renewable energy plans as well as refinancing needs.

However, AGEL may continue to rely extensively on debt to fund growth, which could impact its credit profile unless matched by equity infusions. Execution risks also persist amidst the rapid pace of expansion targeted by management.

Nonetheless, AGEL remains well-positioned to benefit from the strong renewables growth outlook in India. The company is likely to remain one of the top renewable energy stocks to watch out for as India transitions towards clean energy.

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