Adani is a business group that always captures attention and is in the news for its meteoric rise and frequent political controversies. In today’s article, we will discuss Adani Enterprises Limited (AEL) and its future growth potential.
It is the flagship company of Adani Group, which acts as an incubator for the group’s new business initiatives, such as data centers, airports, roads, defense, new industries, digital, media, and many others. This makes it a high-growth potential company.
Adani Enterprises’ share price has risen more than 10X in the last five years. Will the momentum continue?
In this article, we will conduct a fundamental analysis of Adani Enterprises’ Share Price and examine factors contributing to its growth. Let’s start.
What does Adani Enterprises Do?
Adani Enterprises Limited is the flagship company of Adani Group, with a diversified portfolio of businesses in energy and utilities, transport and logistics, and emerging businesses.
The company acts as an incubator for all new businesses of the group and supports them until they become self-sustainable. Adani Ports, Adani Green, Adani Gas, Adani Power, and the food FMCG company were all successfully incubated by AEL in the past and are currently listed on the stock exchange.
The following are the subsidiaries of Adani Enterprises, through which it manages its business interests.
- Adani New Industries Limited (ANIL)
- AdaniConneX (Data Centre)
- Adani Airport Holding Limited (AAHL)
- Adani Road Transport Limited (ARTL)
- Adani Wilmar Limited (FMCG)
- Adani Digital Limited (ADL)
- NDTV
Adani Enterprises also manages the group’s copper and aluminum refining, PVC manufacturing, mining services, and specialist manufacturing businesses.
Adani Enterprises Business Verticals
Adani Enterprises’ business mix is diversified and has different business portfolios. It has four business verticals:
- Energy & Utility Portfolio: It includes a green hydrogen ecosystem, solar manufacturing, wind turbine generators under ANIL, Data Centre, and Water businesses.
- Transport & Logistics Portfolio: It includes airports and road businesses.
- Primary Industry: It includes copper, aluminum, mining, and defense ventures.
- Retail Business: It includes digital (Adani Super App) and food FMCG businesses.
Adani Enterprises Key Managerial Personnel
- Mr Gautam S Adani- Executive Chairman
- Mr Rajesh S Agani- Managing Director
- Mr Pranav V Adani- Director
- Mr Vinay Prakash- CEO and Director
- Mr Jugeshinder Singh- Chief Financial Officer
- Mr Jatin Jalundhwala- Company Secretary & Joint President (Legal)
Adani Enterprises Shareholding Pattern
In the last year, promoters of the company have increased their 2.28% stake in the company. After the promoters and promoter group, LIC of India is the biggest shareholder with a 4.07% stake. Mutual Funds hold a 2.19% stake in the company.
Adani Enterprises Financial Review
Revenue From Operations
The company’s revenue from operations declined by 24.3% in FY24 to ₹ 96,421 crores from ₹ 127,540 crores in FY23. In Q2FY25, it increased 15.66% to ₹22,608 crores from ₹19,546.25 crores.
EBITDA
Despite a decline in revenue in FY24, the EBITDA increased by 32% to ₹13,237 crores from ₹10,012 crores in FY23. EBITDA for Q2FY25 increased by 46% to ₹4,354 crores.
Net Profit
In FY24, Adani Enterprises’ net profit rose 39.6% to ₹3,955 crores from ₹2,833 crores in FY23. The net profit margin in FY24 was 6.19%, 2.37% a year earlier. Net profit in Q2FY25 increased to ₹1,7422 crores, up from ₹228 crores in the same period last year.
Key Financial Ratios
Current Ratio: In FY24, the company’s current ratio improved slightly to 1.15 times from 1.09 times in FY23.
Debt Equity Ratio: The Adani group of companies has always had a concern about its high debt level. Adani Enterprises’ debt-to-equity ratio increased to 0.34 times in FY24 from 0.21 times in FY23. The increase is largely due to new borrowings to support investments in incubation businesses.
Debt Service Coverage Ratio: The company’s debt servicing ability deteriorated in FY24 to 3.66 times from 4.29 times in FY23, on account of increased installment repayment of long-term borrowings.
Return on Equity (ROE): At the end of FY24, the company’s ROE improved to 18.61% from 16.93% in FY23.
Return on Capital Employed (ROCE): During FY24, the company’s ROCE declined to 24.52% from 26.43% in FY23.
Adani Enterprises Borrowings
Adani Enterprises’ total borrowing at the end of FY24 was ₹3,357 crores, compared to ₹900 crores in FY23. Despite increasing debt levels, the company enjoys the highest credit rating by international agencies.
Adani Enterprises Share Price Analysis
Adani Enterprises’ share price performance has been flat in recent months, but if you look at the past 10 years’ returns data, the stock has returned 29% annually to shareholders.
Adani Enterprises’ share price was trading at ₹164 on Nov 28th, 2014, and made an all-time high of ₹4,190 on 21st December 2022.
Adani Enterprises Dividend Payment History
Adani Enterprises consistently pays dividends to its shareholders. In the last 10 years, the company’s dividend payment ranged from ₹0.40 to ₹1.30. At the current market price of ₹2,184, the company’s dividend yield is 0.06.
Adani Enterprises Valuation Score
Price-to-book VS Median Price-to-book
The current price-to-book value of Adani Enterprises is 5.9 times, while the 5-year Median Price-to-Book value is 8.9 times, which means it is trading at a lower valuation compared to historical averages.
PE Ratio VS Median PE
Adani Enterprises’ current PE ratio is 44.6, meaning investors are paying 44.6 times for every ₹1 of earnings. However, looking at the PE ratio in isolation doesn’t tell the full story. Therefore, we will compare it with a 5-year median PE.
As per data from Screener, the company’s 5-year median PE is nearly 103.6. This means that at its current PE level, the stock is not trading at a premium compared to its historical valuations.
EV/EBITDA vs Median EV Multiple
To assess a company’s worth and performance, EV/EBITDA compares its enterprise value (EV) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). EV includes a company’s equity, debt, cash, and cash equivalents and is considered a better alternative to market capitalization.
Adani Enterprises’ EV/EBITDA multiple is 20.5 times, which is lower than the 5-year median EV multiple of 31.7 times.
In all three valuation metrics, Adani Enterprises’ Share Price is trading at a lower valuation compared to historical averages. But, again, you have to check: Why is the company no longer commanding the premium it once did? Are there new risks or business challenges that the company is encountering for which investors are not comfortable buying shares at such high valuations, or is it a time correction?
Adani Enterprises Share Price Future Outlook
Adani Enterprises Limited has invested and is incubating businesses in all the growth areas where the Indian economy will witness a huge jump. The following are the ambitious goals of Adani Enterprises:
- The company aims to establish 1 MMTPA of green hydrogen production capacity in the green hydrogen segment.
- 10 GW of a solar manufacturing ecosystem
- 3 GW of wind turbine manufacturing capacity
- 1 GW of data center infrastructure by 2030
- Largest airport operator in India. Commissioning of Navi Mumbai airport will add further capacity.
- Ventured into aluminum and copper refining and domestic and international commercial coal mining services.
- Ventured into defence manufacturing, focusing on UAVs and ammunition for domestic and international customers.
- Ventured into the media business by acquiring NDTV and aimed its international expansion.
However, the external risks are evident, and the company faces significant challenges in business execution due to higher regulatory scrutiny after the short seller report, resulting in significant erosion of shareholders’ wealth. Any policy changes in the green energy segment can adversely impact the company’s growth potential. Nevertheless, the company has a strong track record of project execution and turning business profitable. However, high borrowing levels are concerning for long-term growth.
Also, Adani Enterprises’ long-term success depends on successfully incubating a business to reach its full potential and eventually listing it as a separate entity in the stock market.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQ
How has Adani Enterprises’ share price performed in the last 3 and 5 years?
As of 21st Nov 2024, Adani Enterprises’ share price has returned 61% and 29% CAGR in the last three and five years, respectively. The all-time high Adani Green share price is ₹4,190.
When was Adani Enterprises incorporated?
Adani Enterprises Limited, the flagship entity of Adani Group, was incorporated on 2nd March 1993.
Does Adani Enterprises make dividend announcements?
Yes, Adani Enterprises has a consistent track record of paying dividends to its shareholders. In 2024, the company paid Rs 1.30 per share as dividend.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
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