Adani Flagship Stock May Return Over 50%, Says Analyst

The Adani Group's flagship company can deliver a gain of more than 50%, Cantor Fitzgerald & Co. said, adding that the firm is central to India's economic ambitions.

"Adani Enterprises Ltd. is at the core of everything India wants to accomplish," analysts Brett Knoblauch and Thomas Shinske wrote in a note dated Jan. 28, initiating coverage as overweight. The risk-reward "is attractive at current levels."

The US-based broker set a price target price of 4,368 rupees, implying an upside of 51% from Thursday's close. It is the only one with an active recommendation on the stock, according to ratings data compiled by Bloomberg. Adani Enterprises rose as much as 5.4% on Monday and the other group firms also gained.

Cantor's buy recommendation will further bolster sentiment on billionaire Gautam Adani's conglomerate that was hit by a US short seller's scathing report around the same time last year. The combined stock market value of 10 Adani companies has more than doubled to $185 billion from a record low of $82 billion in February.

Adani Enterprises' current valuation is largely driven by its airports, roads and the new energy segment, and investors are effectively getting "six other businesses for free," the analysts said. These contributed more than 85% of revenue in the fiscal year ended March 2023, and many are currently in incubation phase, they said. 

While the Hindenburg report highlighted "serious" concerns, the company has taken actions to reduce liquidity risk, improve governance and transparency, Cantor said. "At this juncture, we believe Adani is a bit too big to ignore," they said.

Adani has repeatedly denied Hindenburg's allegations of fraud, which had wiped off more than $150 billion from the group's market value at one point.

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