About the Company
Adani Enterprises (AEL) was integrated in 1988 and it is a part of Adani Group. It is one of the India’s top companies with businesses across multiple verticals. AEL is an MNC with integrated energy and infrastructure platform in India. AEL has emerged as an incubator by investing, maturing and eventually demerging various diversified businesses. The company is coming up with an FPO comprising of fresh issue of ~61mn shares, aggregating up to Rs200bn. It will utilize the proceeds for capex requirements and repayment of debt.
ADANI ENTERPRISES
Leadership Position across Segments
AEL has a strong track record of successful execution of various large-scale projects and the company has emerged as a leader in different segments. It operates under 4 core sectors: Energy and Utility, Transportation and Logistics, Consumer, and Primary Industry. It engages in multiple businesses including mining, edible oil & foods, water, data center, solar manufacturing, integrated resource management and defense. Over the decades of its operations, the group has established unicorns like Adani Power, Adani Ports & SEZ, Adani Transmission, Adani Green Energy, and Adani Total Gas. The group continues to focus on making India a self-reliant country. The Adani Group had a market capitalization of Rs18,402bn (~USD 222bn) as of Dec’22.
Unlocking India’s Green Energy Potential
AEL is setting up a green hydrogen ecosystem under its subsidiary Adani New Industries Ltd (ANIL) with the aim to incubate, build and develop an end-to-end integrated ecosystem for the manufacture of green hydrogen. Among others, it includes manufacturing of renewable energy equipment such as wind and solar modules and production of green hydrogen itself. Hydrogen is becoming increasingly crucial to achieving de-carbonization, especially in sectors like steel, fertilizers, refining, etc. Currently, India’s hydrogen demand is ~6MT, mainly contributed by the fertilizers and refining sectors. Hydrogen consumption in the refineries was estimated at 2.8MMT in FY20 and is expected to grow at a CAGR of 6% until FY30, driven by lower crude quality as well as stricter emission norms.
Development of the Airports Business with Focus on Consumers
The airports portfolio comprises seven operational airports across India, an effective platform to build a network effect for new routes. It intends to re-define India’s airports infrastructure sector through gateway development, regional footprint growth, focus on consumers, non-passengers and a deeper investment in digital technology. It intends to continue leveraging the Adani group’s existing businesses to develop world-class renewable energy infrastructure that helps moderate the carbon footprint of our airports. It plans to accelerate digital investments leading to “Pranaam” services, passenger self-service solutions, centralized airport control center and real-time airport community monitoring, among others. The company also intends to deliver a contactless end-to-end travel experience using advanced technologies such as facial recognition, self-baggage drops and self-boarding gates etc.
Financials in Brief
During FY20-22, its revenue and EBITDA clocked CAGR of 26% and 27% respectively, while EBITDA margin remained flat at 5.3% during FY20 and FY22. The company reported revenue of Rs694bn in FY22, up 76% YoY, while EBITDA increased 48% YoY to Rs37.1bn in FY22 from Rs25.1bn in FY21. Net Profit for FY22 stood at Rs7.9bn as against Rs10.5bn in FY21 and Rs10.4bn in FY20. The decline in profits can be attributed to higher interest and depreciation. For 1HFY23, the company recorded a revenue of Rs790bn, up 3x YoY, EBITDA increased by 2.2x to Rs36bn as margin declined to 4.6% in 1HFY23 from 6.5% in 1HFY22. PAT grew by 2x YoY to Rs9bn. Its ROE during FY20, FY21 and FY22 stood at 5.7%, 5.5% and 2.9% respectively. The company has maintained average Net-Debt/Equity of ~0.9x during FY19-22.
AEL has the potential to recognize early opportunities and bid, acquire and successfully execute projects. It continues to focus on the underpenetrated infrastructure sector in India which has high potential for growth. The customer-centric approach across its businesses, bodes well for the company. Based on the FY22 earnings, the company is valued at 116x EV/EBITDA and 6.2x EV/Sales. The company is backed by its diversified business verticals, optimal projects execution, a strong focus on green energy and financial track record..png)
