Spread the love

With a combined revenue of $1300 Cr and on way the way to become the next big conglomerate, today we answer if Adani is a worthwhile investment.

Adani Group had humble beginnings starting out with an initial capital of Rs. 5 lakh. However, it has now transformed into a global empire with a combined market cap worth $ 22 billion. Starting its journey in 1988, the company has grown in a very short time and has a very diverse business model; with its presence in power generation to ports and from edible oil to finance. As of now, Adani has 6 publicly listed companies, each being among the prominent players in their respective sectors. From a small exports business to becoming one of the top earners for the Indian foreign exchange, it is safe to say Adani has scaled up relatively quickly and made an impact in its sectors.

Adani Group had humble beginnings starting out with an initial capital of Rs. 5 lakh. However, it has now transformed into a global empire with a combined market cap worth $ 22 billion. Starting its journey in 1988, the company has grown in a very short time and has a very diverse business model; with its presence in power generation to ports and from edible oil to finance. As of now, Adani has 6 publicly listed companies, each being among the prominent players in their respective sectors. From a small exports business to becoming one of the top earners for the Indian foreign exchange, it is safe to say Adani has scaled up relatively quickly and made an impact in its sectors.

Adani group has its portfolio ranging from Transport,Utility Infrastructure, Renewable Energy, Mining services and Solar Manufacturing. Moreover, Adani Industries has a partnership with the Government of India in many major projects such as Metro, Airports, and other major Road/Railway projects. With a world leading tech and know-how, Adani Group has systematically excelled in all its ventures.

Source- Adani Enterprises Annual report

Notable Projects

  • Adani Green – “World’s largest solar project worth Rs.45000 Cr” Adani Green recently bagged a major win which transformed Adani into the biggest green player in the Renewable Energy industry with assets worth 15 Giga Watts under various stages of projects.
  • Adani Enterprises – “A Rs.866 Cr Highway project”
  • Adani Enterprises – Received a LoA (Letter of Acceptance) from NHAI for the construction of NH-47 which is a 47,747 km long highway.
  • Adani Enterprises – Been the Highest Bidder for 6 of India’s Airports for civil aviation put up for privatization
  • Adani Ports and SEZ handles 9 ports which handle dry, wet and liquid cargo capability.

Financial Highlights

  • Adani Group has shown potential to deliver consistent ROE.
  • It has also shown proven capability for having low cost operations and high returns.
  • A unique combination of efficient use of capital and bagging major nation building projects gives Adani group a platform to showcase its ability for sustained growth in the future.
  • The shareholders value increased at CAGR of 45% in the last 3 years by demerger of renewable generation and city gas distribution businesses.
  • The consolidated EBIDTA grew 17% to H 2,968 crore in the FY 2019-20 vs H 2,541 crore in FY 2018-19.
  • Consolidated PAT attributable to owners rose 59%.
  • With sectors as such as Ports, Power Generation and Renewables; an unique opportunity is been presented to maintain overall operations, unlike other companies who have seen a halt in manufacturing.

Our Recommendations!

Based on our research, we recommend the following for a long term investment horizon.

  1. Adani Green
Company NameLTPMarket Cap (In Rs.)P/E
Adani Green375.858776.79003471.49

Why Adani Green? Well, Adani Green just bagged a deal worth Rs. 45,000 Cr with a serious opportunity to become one of the largest player in the renewable energy department with having 2.5 GW of solar grid currently operational. The company currently has 3.5 GW of assets currently under construction along with a capital employed of Rs. 12,000 Crs. These along with the largest solar project in the bag, Adani Green can only go upwards from here.

SWOT Analysis of Adani Green:

Strengths
There is a strong buying sentiment in this stock.
Promoters have decreased its pledged holdings    
Weakness
The company has an increasing debt along with weak financials.
Opportunity
The Mutual fund houses have increased their holdings, signalling a a growth investment strategy on their end while the company has recently bagged a “India’s largest solar contract”.
Threat
The stock is trading way higher than its book value.  

2. Adani Enterprises

Company NameLTPMarket Cap (In Rs.)P/E
Adani Enterprises159.50 17,591.4625.2

Being listed as early as 1994, Adani Enterprises represents Adani group of companies in a holistic way and gives an opportunity to invest in the diverse portfolio of investment including Integrated coal management (ICM), Mining services and MSVL Mundra Solar Module.

ICM contributes to the majority of revenue.

Strengths
The company has strong financials and operates in multiple sectors.    
Weakness
Company has seen a declining ROE and declining net profit.  
Opportunities
Stock has a reduced promoter pledge with increase in holdings from the FII’s and Mutual Fundhouses.
Threats
A declining net cash flow.

3. Adani Ports and SEZ

Company NameLTPMarket CapP/E
Adani Ports And SEZ361.173213.7450819.68

Adani Ports operates in handling Bulk dry and liquid cargo handling. It has an independent container freight station while also operating double decker container handling trains for fast inter-land logistic transport. Along with above, during Covid-19, Adani’s Mundra ports has transformed into smart port for reducing human intervention.

PESTLE Analysis Of Adani Group

With Adani group having its presence in almost all continents and being a multinational company, there is an opportunity of spreading the risk of their overall portfolio. Their CSR programs and emphasis on climate protection has also stopped major opposition from climate change groups.

Having a strong growth potential by investing in growth sectors like Infrastructure power and the technology sector such as Data warehouses with potential for high future demand, Adani industries are in no dearth of opportunities.

And dare we say it, if it continues its progress, Adani is on the road map to becoming the next big Indian conglomerate, joining the elite company of Tata and Reliance.

By admin

Leave a Reply

Translate »