Cantor Fitzgerald Initiates Coverage on Adani Enterprises, Predicts 50% Upside with ‘Overweight’ Rating
Cantor Fitzgerald, a prominent brokerage firm, has commenced coverage on Adani Enterprises, assigning an ‘Overweight’ rating and a target price of ₹4,368 per share. The forecast suggests a potential upside of over 50% for Adani Enterprises shares.
In early Monday trade, Adani Enterprises’ stock surged over 5%, reaching ₹3,065.15 per share on the BSE.
Cantor Fitzgerald’s analysis indicates that Adani Enterprises’ current valuation may not fully capture the value of all its components. The brokerage firm sees an attractive risk/reward proposition at the current levels.
Referring to Adani Enterprises as a publicly-traded incubator, Cantor Fitzgerald speculates that several existing business segments may undergo demerger. The report highlights that the company’s present valuation is heavily influenced by three key segments: airports, roads, and its new energy ecosystem. The remaining 85%+ of revenue, consisting of businesses in the incubation phase, is considered a free call option for investors, according to Cantor Fitzgerald.
Adani Enterprises presently owns eight airports, with seven operational and the Navi Mumbai International Airport (NMIA) under development, slated for completion by year-end. The Airports division is valued at ₹1,622 per share.
The Roads segment holds a valuation of ₹1,525 per share, and the solar, wind, and electrolyzers segment is valued at ₹1,511 per share. The aggregate of these valuations amounts to ₹3,419 per share, representing an 18% premium over Thursday’s closing price.
Cantor Fitzgerald emphasizes that shareholders effectively get the remaining six businesses for free at current levels. The brokerage firm’s Sum-of-the-Parts (SOTP) derived price target implies a target FY26E EV/EBITDA multiple of 23.5x, compared to the current 13.9x FY26 EBITDA estimate.
Additionally, Cantor Fitzgerald notes that Adani Enterprises’ valuation does not incorporate any value for its green hydrogen ambitions, projected to be a $7.5 billion+ EBITDA business annually, according to the company’s management.
The brokerage firm anticipates a potential catalyst for share price growth as Adani’s green hydrogen facility becomes operational in FY27E.
Cantor Fitzgerald acknowledges that the stock has minimal analyst coverage, which it perceives as an impediment to investor education about Adani Enterprises and all Adani-named businesses.
Despite concerns raised by the Hindenburg report, Cantor Fitzgerald believes that Adani Enterprises has taken measures to address liquidity risks, enhance governance, and increase transparency.
In conclusion, Cantor Fitzgerald asserts that Adani’s significance makes it too substantial to overlook, and for India, the country needs Adani as much as Adani needs the country.
As of 11:35 am, Adani Enterprises shares were trading 5.10% higher at ₹3,042.30 apiece on the BSE.
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