Synopsis

Clean Max shares: Macquarie initiated coverage on Clean Max Enviro Energy Solutions with an Outperform rating and a Rs 1,700 target price, implying 24% upside from current levels. The stock has gained 13% in three sessions, making Macquarie the second brokerage to initiate coverage after JM Financial.

Macquarie initiated coverage on Clean Max with an Outperform rating. 

Shares of Clean Max Enviro Energy Solutions rose 5% to hit a day’s high of Rs 1,445 after Wall Street major Macquarie initiated coverage on the stock with an Outperform rating and a target price of Rs 1,700, implying 24% upside from current market levels.

With today’s gain, the stock has risen 13% over the past three sessions. Macquarie is the second brokerage to initiate coverage of the stock in two sessions, following JM Financial.

Macquarie expects CleanMax's installed base to more than double to around 8 GW by FY29E. It sees repeat C&I business and exposure to Data & AI transactions supporting growth and longer-term earnings upside in India's underpenetrated C&I renewables market.

The brokerage estimates that C&I users account for more than 50% of electricity consumption, with two-thirds dependent on relatively expensive DISCOM supply. It expects renewable adoption in the segment to outpace demand growth as corporates look to lower costs, with potential savings of up to 35%, while also pursuing decarbonisation.

Macquarie views CleanMax as a corporate-energy platform rather than a conventional independent power producer (IPP), supported by around 600 customer relationships, multistate regulatory capabilities and integrated energy solutions. It said repeat C&I business provides steady growth, while Data & AI transactions, which account for around 42% of contracted capacity, offer longer-term upside.

On financials, Macquarie forecasts around 5 GW of incremental capacity through FY29E, which it expects to drive Power Sales EBITDA CAGR of more than 50% over FY26-29E. The brokerage estimates capex at Rs 260 billion, keeping free cash flow negative and leverage elevated. However, it expects lower borrowing costs, strategic co-investments and EBITDA growth to bring net debt/EBITDA down towards 7.5x by FY29E.

Macquarie said it expects sustained customer savings compared with conventional power procurement to support capacity additions at a faster pace than the market expects. Its 25%-weighted bull case assumes annual additions of more than 2 GW and an EBITDA CAGR of 60%+ over FY26-29E. The brokerage also flagged regulatory, execution and dilution risks.

With a Buy rating and a target price of Rs 1,501, the brokerage implies an upside potential of x% from current levels. It says CleanMax is well placed to capture the exponential expansion of India's corporate green energy transition despite facing temporary headwinds of curtailment in CTU-connected projects.

JM Financial expects demand in the commercial and industrial (C&I) segment to remain robust, driven by rising electrification needs, increasing captive power demand amid utility power deficits and the rapid expansion of data centres.

The brokerage said CleanMax's leadership in the C&I market and strong customer stickiness position the company to capitalise on the expected growth in C&I power demand. JM Financial values the stock at 10.5x FY28E run-rate EBITDA.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.

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