- Revenue rose 11.6% YoY to ₹56,203 Cr, yet net profit fell 38.8% YoY.
- Quarterly earnings showed a 28% revenue dip and a 15% profit slide versus the prior year.
- Share price ticked up 2.05% to ₹142.77 after the split, but market sentiment remains bearish.
- New wholly‑owned subsidiary could unlock hidden value, but execution risk is high.
- Peers like Tata Power and NTPC are navigating similar margin pressures, offering comparative benchmarks.
You missed the red flag in Adani Power's latest earnings, and now the price is moving.
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Why Adani Power's Revenue Growth Masks a Sharper Profit Slide
Adani Power reported ₹56,203 Cr of revenue for FY25, an 11.62% increase over FY24. The top‑line boost stems from higher power sales volumes and modest tariff revisions in several states. However, the bottom line tells a different story: net profit plunged to ₹12,749 Cr from ₹20,828 Cr, a 38.8% decline. The earnings‑per‑share (EPS) fell from ₹51.62 to ₹32.32, reflecting both lower profitability and the recent 1:5 stock split (face value from ₹10 to ₹2).
The profit erosion is driven by three key factors:
- Fuel cost volatility: Coal and gas price spikes raised generation costs, squeezing margins.
- Higher depreciation & amortisation: Recent asset acquisitions and the split increased non‑cash charges.
- Regulatory pressure: Some state utilities delayed payments, inflating receivables.
For a growth‑focused investor, the revenue story looks attractive, but the margin compression signals a potential valuation trap.
How the Stock Split and New Subsidiary Could Rewire Valuation
On 22 Sept 2025, Adani Power executed a 1‑for‑5 stock split, lowering the face value to ₹2. Splits are neutral in theory—they don’t alter market cap—but they can broaden the shareholder base by making shares more affordable. In practice, the post‑split rally of 2.05% suggests renewed retail interest, yet the underlying fundamentals remain unchanged.
On 12 Feb 2026 the company announced the incorporation of a wholly‑owned subsidiary focused on renewable‑energy assets. This move aligns with the government’s push for clean power and could unlock green‑cash‑flow streams. However, the subsidiary will likely carry start‑up costs and capital‑intensive projects, which could weigh on near‑term earnings.
Sector Landscape: Power Generation Trends and Peer Moves
Adani Power operates in a sector where capacity expansion, fuel mix shifts, and regulatory reforms drive earnings volatility. Tata Power, a direct peer, posted a modest 5% revenue rise but managed to keep profit margins stable through aggressive cost‑cutting and a stronger renewable portfolio. NTPC, the industry heavyweight, recorded a 3% top‑line growth with a 12% profit increase, benefitting from lower coal procurement costs.
Compared to these peers, Adani’s profit decline is steeper, suggesting that its cost structure is more exposed to fuel price swings. Investors should monitor whether the new subsidiary can accelerate the transition to cheaper renewables and improve the cost curve.
Technical Signals: Chart Patterns and Momentum After the 2% Pop
From a chart‑technical perspective, the stock broke above its 20‑day simple moving average (SMA) at ₹140, indicating short‑term bullish momentum. However, the Relative Strength Index (RSI) sits at 62, edging toward overbought territory. The daily candlestick pattern shows a bullish engulfing on the latest session, but the volume surge was modest—only a 1.3× increase over the 5‑day average.
Key support lies around ₹135 (the previous swing low), while resistance caps near ₹150 (the 50‑day SMA). A break below ₹135 could trigger a sharper correction, especially given the bearish sentiment from analysts.
Historical Parallel: Past Profit Dips and Share Performance
Adani Power experienced a similar profit contraction in FY22, when net profit fell 22% due to a sudden coal price surge. At that time, the share price dipped 8% over three months before rebounding as the company secured long‑term coal supply contracts and increased renewable capacity. The rebound delivered a 28% total return over the subsequent year.
The historical pattern suggests that if Adani can mitigate fuel cost exposure and accelerate its green transition, the current discount could present a buying opportunity. Conversely, failure to address margin pressure could lead to a prolonged downtrend.
Investor Playbook: Bull vs Bear Cases for Adani Power
Bull Case: The 11.6% revenue growth indicates market share gains. The stock split broadens the investor base, and the new renewable subsidiary offers long‑term upside. If fuel costs normalize and the company improves its working‑capital cycle, margins could recover, delivering a 20‑30% upside over the next 12 months.
Bear Case: Persistent profit decline, high debt levels, and delayed payments from state utilities could keep margins suppressed. The renewable subsidiary may require heavy capex before becoming cash‑flow positive, dragging earnings further. In this scenario, the stock could fall back to ₹120, a ~16% decline from current levels.
Investors should weigh these scenarios against their risk tolerance, consider position sizing, and monitor upcoming earnings guidance and fuel‑price trends.