Sunday, July 14, 2024

Adani Stocks Soar Amidst Modi Wave, Boosting Market Cap

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The Adani Group, the multi-billion dollar conglomerate led by Gautam Adani, experienced a remarkable surge in its stock prices on Monday. The unanimous predictions from exit polls that Prime Minister Narendra Modi will secure a resounding victory in the highly anticipated Lok Sabha election results scheduled for Tuesday fueled this rally. The conglomerate’s combined market capitalization witnessed a staggering increase of nearly Rs 1.4 lakh crore, propelling the total market value of its listed entities to an impressive Rs 19.24 lakh crore.

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Adani Power Leads the Charge

Adani Power emerged as the top performer, rallying 16% to hit a fresh 52-week high of Rs 875 on the Bombay Stock Exchange (BSE). This remarkable achievement came on the heels of the stock’s nearly doubling in value over the past six months. Within the Nifty50 pack, Adani Ports and Special Economic Zone (APSEZ) led the gains with a 9% return, closely followed by a 7% upside in the group’s flagship entity, Adani Enterprises.

Other Notable Gainers

The rally was not limited to these two stocks. Other Adani Group companies also experienced significant gains, with Adani Total Gas, Adani Energy Solutions, and Adani Green Energy trading 7-8% higher. Several counters have already erased all losses incurred during that period, and Adani stocks are now inching closer to their pre-Hindenburg Research levels.

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Robust Financial Performance

The Adani Group’s financial performance in the fiscal year 2024 (FY24) has been equally impressive. The conglomerate’s profit after tax (PAT) witnessed a staggering 55% jump to Rs 30,768 crore, while its EBITDA grew by 40% year-on-year to Rs 660 billion. These robust financial results have undoubtedly contributed to the confidence of investors in the group’s prospects.

Analysts’ Optimism

Jefferies, a leading global investment bank, has issued buy recommendations for several Adani Group companies, including Adani Enterprises (target price Rs 3,800), Adani Ports (target price Rs 1,640), and Adani Energy Solutions (target price Rs 1,365). Last week, CLSA, another prominent financial services firm, included Adani Ports, Adani Enterprises, ACC, and Ambuja Cement in its list of 54 “Modi stocks,” perceiving them as direct beneficiaries of Prime Minister Modi’s policies.

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Expansion Plans and Growth Prospects

The Group’s expansion plans and growth prospects have further bolstered investor confidence. According to Jefferies, the conglomerate is back on an expansion spree, eyeing a staggering $90 billion in capital expenditure over the next decade. Adani Enterprises is reportedly scaling up its captive manufacturing capacity, with plans to commence green hydrogen production by FY27. Additionally, the Navi Mumbai Airport project is expected to commence operations by the fourth quarter of FY25, and data center projects are also scaling up.

Adani Ports’ 5-Year Roadmap

Adani Ports, a key subsidiary of the group, recently published its 5-year business roadmap, targeting an impressive 18% EBITDA Compound Annual Growth Rate (CAGR) between FY24 and FY29E. The company aims to achieve 1 billion metric tons of cargo volume by 2030, representing a 15% CAGR in cargo volumes. Furthermore, Ports EBITDA is expected to rise at a 16% CAGR, driven by expansion and capacity ramp-up.

Adani Green Energy’s Ambitious Targets

Adani Green Energy, the renewable energy arm of the group, has raised its 2030 power capacity target from 45 GW to 50 GW, including 5GW of pumped hydro storage capacity. This ambitious goal underscores the group’s commitment to sustainable energy and aligns with the government’s push towards renewable energy sources.

Adani Total Gas’ Diversification Plans

Adani Total Gas, a joint venture between the Adani Group and Total SE, plans to diversify its business segments. The company intends to establish an LNG station network for the transport and mining sectors, as well as develop EV charging facilities, positioning itself for the rapidly evolving energy landscape.

Adani Wilmar’s Focus

Adani Wilmar, the group’s food and agri-business subsidiary, plans to concentrate on expanding its distribution network, ramping up alternative channels, and improving the mix of premium brands in its product portfolio.

The Group’s remarkable stock rally, fueled by the anticipated victory of Prime Minister Narendra Modi, has not only boosted the conglomerate’s market capitalization but also underscored the confidence of investors in the group’s growth prospects and ambitious expansion plans. With a diverse range of businesses spanning energy, infrastructure, manufacturing, and agriculture, the Group appears poised to capitalize on the political continuity and the government’s economic agenda, positioning itself as a major player in India’s rapidly evolving business landscape.

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