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Jefferies is bullish on Adani Group and recommends ‘Buy’ on 4 companies of the Group

By Vaseline May31,2024
Jefferies is bullish on Adani Group and recommends ‘Buy’ on 4 companies of the Group

New Delhi, May 31 A new Jefferies report recommends ‘Buy’ for Adani Enterprises, Adani Ports, Adani Energy Solutions and Ambuja Cements as the Adani Group posted an impressive EBITDA (year-on-year) growth of 40 percent in FY24.

The global investment bank and financial services firm turned bullish on India’s largest infrastructure developer Adani Group after its stellar performance in FY24.

Despite the setback from the short seller report at the end of FY23, Adani Group has emerged unfazed and its businesses have shown solid resilience and turned the ‘setback’ into a comeback.

The report states that while the group’s EBITDA (a commonly used earnings metric for infrastructure companies) showed 40 percent year-on-year growth in FY24, the group-level leverage ratio improved to a multi-year low.

“During FY24, the group focused on limiting debt and reducing founder shareholdings. The group’s total EBITDA grew by 40 percent (year-on-year) in FY24; the group raised new money from equity and strategic investors, the promoter increased its stake in group companies, while the group’s debt and market capitalization recovered,” the report said.

“The group is once again expanding and expects a capital investment of $90 billion over the next decade,” it added.

Adani Enterprises is scaling up its own production capacity to start producing green hydrogen by FY27.

“It looks like the Navi Mumbai Airport will be commissioned in March FY25; Data center projects are getting bigger,” the report said.

Adani Ports recently released its five-year business roadmap, targeting an EBITDA CAGR of 18 percent in FY24-29E.

“Adani Ports’ EBITDA is expected to grow at 16 percent CAGR, led by expansion and ramp-up, with the company targeting a cargo volume of 1 billion by 2030 (15 percent CAGR),” the report said.

Adani Energy Solutions’ 16 percent EBITDA growth was driven by the addition of new lines, while Adani Total Gas’s 27 percent year-on-year growth was driven by 15 percent volume growth and gross margin expansion, helped due to lower gas costs.

At Ambuja Cements, management continues to lead efforts to double cement capacity and scale up unit EBITDA to industry-leading Rs 1,450-1,500/T by FY28, according to the Jefferies report.

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