Adani Group stocks surged sharply in today’s trading session, driven by multiple positive developments that spurred strong demand for the group’s shares. Leading the performance was Adani Power, which gained 10%, closing at ₹776.40 and hitting a new all-time high of ₹797 per share.
Adani Total Gas followed closely as the second top performer, rising 9.6% to settle at ₹1,047 per share. Other group stocks, including Adani Enterprises, Adani Green Energy, Adani Ports & Special Economic Zone, Adani Wilmar, Adani Energy Solutions, ACC, Ambuja Cements, and NDTV, also saw gains ranging from 2.5% to 9%.
Also Read: India Ratings upgrades Adani Green Energy to ‘IND AA-’ with stable outlook
This rally was attributed to the positive sentiment highlighted by global brokerage firm Jefferies, which noted that the conglomerate has recovered from the losses incurred during the Hindenburg episode and is now back on an “expansion spree,” planning a USD 90 billion capex over the next decade.
In January last year, U.S. short-seller Hindenburg released a critical report on Adani Group, alleging accounting fraud, stock price manipulation, and improper use of tax havens. The Adani Group has consistently denied all these allegations since the controversy began.
However, the stocks were significantly impacted as investor concerns grew. In response, the group undertook several measures to restore investor confidence, including raising fresh funds from equity, debt, and strategic investors and increasing the promoters’ stake in group companies. These efforts helped the stocks recover in the following months.
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During the financial year 2023–24, the Adani Group focused on containing its debt and reducing the founders’ share pledge, according to a report by Jefferies. The report noted, “Total group EBITDA grew 40% year-on-year in 2023–24 to ₹660 billion. Adani Group’s profit after tax (PAT) in FY24 jumped 55% to ₹30,768 crore.”
The Jefferies report highlighted several key developments at the group level, including the commissioning of the ingot wafer unit. It also noted that the net debt at the group level (including eight companies and the debt related to the cement business acquisition) remained stable at ₹2.2 trillion in 2023–24, compared to ₹2.3 trillion the previous year.
Also Read: Adani Enterprises, HAL, and more: Jefferies initiates coverage on 13 stocks
Bullish outlook
The brokerage has given a ‘buy’ rating to three group stocks: Adani Enterprises with a target price of ₹3,800 apiece, Adani Ports with a target price of ₹1,640 apiece, and Adani Energy Solutions with a target price of ₹1,365 apiece.
The brokerage stated that Adani Enterprises is scaling its captive manufacturing capacity towards starting green hydrogen production by 2026–27. Additionally, the Navi Mumbai Airport is likely to be commissioned by the fourth quarter of the current financial year 2024–25, and data center projects are also scaling up.
The brokerage underscored the sustained market share gains for Adani Ports and Special Economic Zone, attributing them to the recent commissioning of the dedicated freight corridor at Mundra. This development has imparted considerable impetus to the company’s performance. Furthermore, the brokerage identified the significant logistics potential as a key driver of growth for the company.
Also Read: Invested ₹1 lakh in Adani Enterprises 5 years ago? Here’s your return today
In the case of Adani Energy Solutions, the brokerage highlighted a strategic approach to debt management. Specifically, it noted that debt refinancing is being pursued to align with the life of the respective asset at fixed rates wherever feasible.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 31 May 2024, 06:06 PM IST
