Target: ₹2,821
CMP: ₹2,371.55
On December 9, 2021, we initiated coverage on the Adani Group, including Adani Enterprises Ltd (AEL). Post our coverage, AEL has undertaken several initiatives that warrant detailed coverage. Through Adani New Industries Ltd (ANIL), the group’s recent incubator in the production of renewable energy, green H2 and downstream products, AEL will emerge as the world’s primary leader in the green H2 ecosystem.
Apart from ANIL, AEL’s other incubating businesses, in the domains of airports, data centres, roads and defence are on the verge of gaining traction and should be value-accretive in the short-to-medium term. AEL’s new incubating forays into copper and green PVC have significant drivers in place to ensure long-term profitability and the equity contribution is expected to be funded from internal accruals.
The existing coal ecosystem has favourable tailwinds which will endure the already appreciated energy pricing (post the Russia-Ukraine conflict).
We believe de-merger of the incubating business can result in significant value unlocking.. A case in point is the 153 per cent appreciation in the stock price of Adani Wilmar post-IPO. We expect the airport business to be the next value-unlocking story.
Risks to our upside thesis are unexpected downturn in the economy, delay in project execution and project finance.