Adani Group’s profit after tax (PAT) for FY24 has surged by 55% to reach Rs 30,768 crore, indicating a strong growth trajectory despite the challenges faced during the Hindenburg crisis last year.
Analysts at global brokerage firm Jefferies have recommended buying three Adani stocks based on their analysis of the earnings data.
In FY24, the Adani group’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for its listed companies increased by 40% year-on-year to Rs 660 billion. Adani Power’s EBITDA more than doubled due to capacity expansion, higher volumes, increased contribution from merchant sales, and reduced imported coal prices. Most other group companies also saw EBITDA growth ranging from 16% to 33%, except for Adani Wilmar, which experienced a decline.
Adani Enterprises witnessed a 29% year-on-year growth in EBITDA, primarily driven by the growth in new businesses such as renewable energy, solar, airports, and trading in industrial raw materials. Ambuja Cement’s EBITDA increased significantly due to improved unit economics. Adani Ports saw a 24% growth in EBITDA driven by increased volumes, while Adani Green recorded a 33% growth in EBITDA attributed to capacity expansion and higher capacity utilization.
Adani Energy Solutions and Adani Total Gas also saw growth in EBITDA, driven by various factors such as new line additions, volume growth, and margin expansion.
The group’s net debt remained stable at Rs 2.2 trillion in FY24 compared to Rs 2.3 trillion in the previous fiscal year. The net debt to EBITDA ratio improved to 3.3x in FY24 from 5x in the previous year. Adani Ports and Adani Power witnessed a decrease in net debt, while Adani Enterprises and Adani Green saw an increase due to new capital expenditure projects.
Jefferies’ Recommendations
Jefferies recommends buying Adani Enterprises, Adani Ports, and Adani Energy Solutions stocks, with target prices of Rs 3,800, Rs 1,640, and Rs 1,365 respectively.
Adani Ports is expected to continue its strong performance, with market share projected to increase to over 30% by FY26-27. Adani Energy Solutions is forecasted to achieve significant revenue and EBITDA growth driven by growth in its transmission, distribution, and smart-metering business.
The company focuses on minimizing volatility in its asset base by refinancing debt, vendor back-to-back arrangements, and thorough land studies for commissioning transmission projects.
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