Adani Energy’s Smart Metering Push Set to Drive Strong EBITDA Growth

Adani Energy Solutions Ltd (AESL) is set to witness a major boost in its earnings through a sharp focus on smart metering. Industry analysts and rating agencies expect this segment to significantly improve the company’s EBITDA performance in the coming years.

Smart Meters for Smarter Distribution

Smart meters enable real-time tracking and forecasting of electricity consumption across micro-geographies. This allows for optimized power distribution and better control over retail operations. AESL currently commands a 17% market share in India’s smart metering space, backed by an order book of 23 million meters.

Financial Upside and Fast Cash Conversion

According to Fitch Ratings, the smart metering business contributed nothing to AESL’s EBITDA in FY24, but this number jumped to 15% in FY25 and is projected to exceed 25% in FY26. Revenue generation starts once 25,000 meters or 5% of the contracted capacity is installed, whichever occurs first.

Despite challenges in dealing with India’s state-owned power distribution companies, the integration of direct debit systems for customer billing has streamlined dues collection, helping to stabilize cash flows.

High Margins, Strong Returns

Each smart meter installation requires an upfront investment of ₹5,800. Over a 90-month contract period, AESL is expected to earn around ₹12,000 per meter, maintaining a strong EBITDA margin of approximately 85%.

Elara Capital emphasized that AESL’s experience managing Mumbai’s distribution network has positioned it as a key player in India’s national smart metering rollout.

Project Scale and Growth Targets

Jefferies estimates the total value of AESL’s ongoing smart metering projects to be around ₹27,200 crore. The company aims to install 4.5 million meters by the end of FY25 and reach 10 million by FY26. Out of these, 7 million meters are part of existing contracts, while the rest are expected to come from new deals.

National Smart Metering Mission and Investments

India has set an ambitious target of installing 250 million smart meters by 2030. However, as of January 2025, only 20 million meters have been installed. Care Edge Ratings anticipates that just 25% of this target will be achieved by March 2026.

Achieving the full target requires a total investment of ₹1.25 lakh crore, with ₹95,000 crore expected from debt and the remainder from equity contributions.

Competition and Innovation

Tata Power Delhi Distribution is also advancing in this space. The company recently partnered with Probus Smart Things to deploy smart meters featuring Bluetooth-enabled Universal Network Interface Cards (NICs), enhancing connectivity and data handling capabilities.

Industry-Wide Benefits

According to Care Edge Ratings, power distribution companies across India could generate an additional ₹4 lakh crore in revenue over the next seven years through nationwide adoption of smart metering. With its scale, technological edge, and execution capabilities, AESL is well-positioned to play a central role in this transformation.