The Adani Group’s logo can be seen on the facade of its Corporate House on the outskirts of Ahmedabad. File | Photo source: Reuters
The Adani Group reported a 55% rise in profits in the fiscal year ended March 2024 as the airport apple transport conglomerate returned to its expansion spree and expects capital expenditure of $90 billion over the next decade.
Coming off the back of a damning US short-selling report that hit the market value of its listed companies, the Adani group has focused on debt reduction, limiting the pledge of founders’ shares and consolidation in 2023-24 (April 2023 to March 2024). activities in the field of key competences.
This helped boost the net profit of the group’s listed companies to ₹ 30,767 crore in the financial year from ₹ 19,833 crore a year earlier, according to stock exchange and analyst data. The five-year CAGR (compounded annual growth rate) of earnings growth was 54%.
EBITDA (earnings before interest, tax, depreciation and amortization) rose 40% to ₹ 66,244 crore despite a 6% decline in revenue.
EBITDA increases by 40%
“The group’s total EBITDA grew by 40% year-on-year in FY24 (5-year CAGR of over 27%), the group raised fresh funds from equity/debt/strategic investors, the promoter increased its stake in group companies and the Mcap group recovered up,” according to Jefferies’ memo. “The group is back on an expansion spree and expects $90 billion in capital expenditure over the next decade.” According to the US brokerage house, the group’s financial leverage was the lowest in many years.
“Net debt at the group level (eight companies plus debt related to acquisition of cement businesses) remained stable at Rs 2.2 lakh crore in FY24 as against Rs 2.3 lakh crore. Net debt/EBITDA increased significantly to 3.3x EBITDA in FY24 compared to 5x year-on-year,” it said.
Adani Ports and Adani Power saw a decline in net debt in FY24. The augment in financial leverage for Adani Enterprises and Adani Green was a result of the companies undertaking modern investment projects.
In FY24, the group’s flagship Adani Enterprises commissioned an ingot unit for solar module manufacturing, wind power plant and copper smelting. Adani Cement has completed the acquisition of Sanghi Cement as promoters pumped more funds into the company.
Adani Ports acquired Gopalpur Port, Adani Power commissioned the 1.6 GW Godda power plant, Adani Green added 2.8 GW of renewable capacity and commenced operations of a solar power project in Khavda, Gujarat, and Adani Energy Solutions constructed 1,244 km of line circuits transmission.
On the way forward, Jeferries said, “Adani Enterprises is in the process of scaling up its own production capacity to commence green hydrogen production by FY27; Navi Mumbai Airport seems likely to be commissioned in Q4FY25; data center projects are scaling up.” Adani Cement plans to double production capacity. Adani Ports has outlined its 5-year action plan, which assumes EBITDA growth at 18% CAGR in 24-29.
“Ports EBITDA is expected to grow at 16% CAGR on expansion and growth, with the company targeting to achieve cargo volumes of 1 billion tonnes by 2030 (15% CAGR),” he said, adding that Adani Green has increased its 2030 generation target from 45 GW to 50 GW, now including 5 GW of pumped storage.
Adani Total Gas plans to develop modern business segments, including a network of LNG stations for the transport and mining sectors and electric vehicle charging stations. Commodity company Adani Wilmar is focused on expanding distribution, developing alternative channels and improving its premium brand lineup.
Jefferies has recommended ‘Buy’ on four group companies – Adani Enterprises, Adani Ports & SEZ, Adani Energy Solutions and Ambuja Cements.
