Current Rating and Its Significance
MarketsMOJO currently assigns Adani Energy Solutions Ltd a 'Sell' rating, reflecting a cautious stance on the stock. This rating indicates that investors should consider reducing their exposure or avoiding new purchases at present, given the company’s financial and valuation challenges. The rating was revised on 07 Oct 2025, moving from a 'Strong Sell' to a 'Sell' as the company showed some improvement in certain areas, but still faces significant headwinds.
Here’s How the Stock Looks Today
As of 28 December 2025, Adani Energy Solutions Ltd is classified as a large-cap company operating in the power sector. The stock has delivered a robust 27.93% return over the past year, with a year-to-date gain of 25.63%. Shorter-term returns also show positive momentum, including a 15.22% rise over three months and a 17.16% increase over six months. The stock’s one-day gain stands at 1.69%, reflecting ongoing bullish sentiment in the market.
Despite these encouraging price movements, the company’s underlying fundamentals present a more nuanced picture. The MarketsMOJO Mojo Score currently stands at 36.0, categorised as 'Sell', which is an improvement from the previous score of 27 ('Strong Sell'). This score is derived from a comprehensive assessment of four key parameters: Quality, Valuation, Financial Trend, and Technicals.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Quality Assessment
The quality grade for Adani Energy Solutions Ltd is below average. The company is characterised as a high debt entity, with an average debt-to-equity ratio of 2.34 times, signalling significant leverage. This elevated debt level increases financial risk and limits flexibility for future investments or expansions. Profitability metrics also reflect challenges; the average Return on Capital Employed (ROCE) is 8.65%, indicating modest returns generated per unit of capital invested. The latest quarterly results reveal a decline in profitability, with the PAT falling by 20.9% to ₹533.97 crores. Additionally, operating cash flow for the year is deeply negative at ₹-955.19 crores, underscoring cash generation difficulties.
Valuation Considerations
Valuation remains a critical concern, with the company graded as very expensive. The stock trades at an enterprise value to capital employed ratio of 2.6, which is high relative to its peers. Although the stock price has appreciated significantly, the price-to-earnings-growth (PEG) ratio stands at 5.2, suggesting that earnings growth is not keeping pace with the valuation premium. Despite this, the stock currently trades at a discount compared to the average historical valuations of its peer group, which may offer some relative value for investors willing to accept the risks.
Financial Trend Analysis
The financial trend for Adani Energy Solutions Ltd is negative. The company’s inventory turnover ratio for the half-year is at a low 36.05 times, indicating slower movement of inventory which can tie up working capital. The negative operating cash flow and declining profitability point to operational challenges that could weigh on future earnings. While the stock price has shown resilience, underlying financial health metrics suggest caution.
Technical Outlook
Technically, the stock exhibits a bullish trend. Positive price momentum is evident in the recent returns, with gains across multiple time frames. This technical strength may attract short-term traders and momentum investors. However, technicals alone do not offset the fundamental concerns, and investors should weigh both aspects carefully.
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What This Rating Means for Investors
The 'Sell' rating on Adani Energy Solutions Ltd suggests that investors should exercise caution. While the stock has demonstrated strong price appreciation recently, the company’s financial fundamentals and valuation metrics indicate underlying risks. High leverage, negative cash flows, and below-average profitability raise concerns about the sustainability of growth and earnings. The expensive valuation relative to earnings growth further tempers enthusiasm.
Investors considering this stock should closely monitor upcoming quarterly results and any changes in the company’s debt profile or operational efficiency. The bullish technical trend may offer short-term trading opportunities, but a prudent approach would be to prioritise fundamental strength and valuation before committing significant capital.
In summary, the 'Sell' rating reflects a balanced view that acknowledges some positive momentum but highlights substantial risks that currently outweigh the potential rewards. This rating serves as a guide for investors to reassess their holdings and consider alternative opportunities with stronger financial health and more attractive valuations.
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