"Back On Expansion Spree": Jefferies Bullish On Adani Group

Adani Group is back on an "expansion spree" and eyeing USD 90 billion capex over the next decade, said investment bank and financial services firm Jefferies in a report, as it forecasts a road ahead for the Group.

During the financial 2023-24, the Group largely focused on containing its debt, the investment bank in its report. "During FY24, the group focused on containing debt, reducing founders share pledge."

"Total group EBITDA grew 40 per cent YoY in 2023-24 (to Rs 660 billion), the group raised fresh funds from equity/debt/strategic investors, promoter increased stake in group Cos and group Mcap rebounded," the Jefferies report noted.

The report noted that the net debt at the group level (eight Companies plus the debt related to cement business acquisition) remained stable at Rs 2.2 trillion in 2023-24 versus Rs 2.3 trillion.

The Jefferies report also highlighted key developments taken at the Group level. The group commissioned the Ingot wafer unit.

Adani Cement completed the Sanghi Cement acquisition. Adani Ports acquired Gopalpur port in Odisha; Adani Power commissioned a 1.6 GW Godda power plant; Adani Green added 2.8 GW renewable energy capacity; commenced operations for its 775 megawatt solar power projects in Khavda, Gujarat.

Further, Adani Energy Solutions had 1,244 ckm (Circuit kilometer) of transmission lines; Adani Total Gas added 91 CNG stations, and 116,000 domestic PNG customers during the year.

Adani Wilmar's food and FMCG business scaled to 1 million tonnes in volumes and Rs 50 billion in turnover with improving margins.

Jefferies also touched upon way ahead, company-wise at Adani Group.

It said flagship company Adani Enterprises is scaling its captive manufacturing capacity towards starting Green Hydrogen production by 2026-27; Navi Mumbai Airport appears likely to commission by the fourth quarter of the current financial year 2024-25; data centre projects are also scaling up.

Adani Cement management, it says, continues to guide the doubling of cement capacity and scale-up in unit EBITDA to industry-leading Rs 1450-1500 per tonne by 2027-28.

Adani Ports recently published its five-year business road map, targeting an 18 per cent EBITDA compound annual growth rate in 2023-24-2028-29.

"Ports EBITDA is expected to rise at 16 per cent CAGR led by expansion and ramp-up with the company targeting 1 billion tonne cargo volume by 2030 (15 per cent CAGR)," Jefferies report noted.

Adani Green raised its 2030 power capacity target from 45 GW to 50 GW now including 5GW pumped hydro.

Adani Total Gas plans to grow new business segments including the LNG station network for the transport and mining sector and EV charging facilities.

Adani Wilmar is focused on distribution expansion, ramping alternate channels and improving the mix of premium brands, the investment bank's report noted.

Jefferies has given a 'buy' call for Adani Enterprises with a target price of Rs 3,800, Adani Ports and Special Economic Zone Ltd at Rs 1,640, Adani Energy Solutions at Rs 1,365, and Ambuja Cements at Rs 735, respectively.

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