Adani Enterprises is the largest Adani Group-backed company with market capitalisation worth nearly Rs 2.26 lakh crore as of January 3, 2025. Adani Enterprises is also the flagship company of billionaire Gautam Adani who owns India's one of the largest port-to-energy empires. The start of the new year 2025 has been positive for Adani Enterprises, with its latest weekly gains of about 3.5% on BSE. This large-cap stock is recommended to buy with the potential of more than 48% upside in the next 24 months.
Why Adani Enterprises is recommended to BUY?
One of the key reasons that sets Adani Enterprises as a potential candidate for robust growth on stock exchanges is that the company is seen as the largest business incubator which has conceived, grown, matured and demerged many successful businesses (including Adani Ports & SEZ, Adani Total Gas, Adani Energy Solutions, Adani Green Energy, Adani Power and Adani Wilmar, as per Ventura Securities.
Currently, Adani Enterprises is incubating airports, manufacturing solar modules & WTG, green hydrogen, road construction, data center, copper, etc.
In short, it is in the DNA of Adani Enterprises for growth ahead.
Ventura Securities which is the latest to recommend BUY on Adani Enterprises said, over FY24-27E, AEL's consolidated revenue, EBITDA, and net earnings are expected to grow at a CAGR of 17.5%, 37.5%, and 45.8%, reaching INR 1,56,343 cr, INR 28,563 cr, and INR 9,245 cr, respectively. EBITDA and net margins are projected to expand by 647bps to 18.3% and 255bps to 5.9% respectively.
Brokerage's note said, "Strong growth in airports and solar/WTG businesses and revenue contribution from copper are expected to enhance financial performance and profit margins. As a result, return ratios - RoE and RoIC - are expected to improve by 563bps to 14.5% and 99bps to 11.3% respectively."
As per Ventura, Adani Enterprises is targeting INR 6.5-7.0 trillion in capex over the next decade for its expansion into airports, data centers, copper and green H2 & its ecosystem. This is expected to be primarily funded through debt, leading to an increase in net debt-to-equity and net debt-to-EBITDA from 1.2x/1.7x in FY24 to 1.8x/2.2x by FY27E. As part of the raise, the company raised INR 4,200 cr in Q2FY25 through a QIP with strong participation from both international and domestic investors and INR 800 cr through its first-ever public issuance of NCDs, marking the first such public issuance by a non-NBFC private corporate in the last decade. Additionally, the airport business secured INR 1,950 cr, and the road business raised INR 1,124 cr, both through NCD issuances.
Hence, on the valuation, Ventura's note said, "We recommend BUY with our SOTP-based price target of INR 3,801 (21.2X FY27 EV/EBITDA)." It added, "Even if we don't consider the value of green H2 vertical, the SOTP value comes at INR 3,029, indicating a potential upside of 25.7%. Recent volatility in the share price has led to a significant increase in the stock beta. As volatility subside beta should decrease consequently alleviating the valuations."
The latest target price signals about 48.21% potential upside in Adani Enterprises over the period of 24 months, compared to its current market price.
Adani Enterprises Share Price:
Last week, on Friday, Adani Enterprises' share price stood at Rs 2564.55 apiece on BSE, with a market cap of Rs 2,95,995.42 crore. The stock's 52-week high and low is at Rs 3,743 apiece and Rs 2,030 apiece respectively. Its price-to-equity ratio is at 107.26x, while its return on equity is at 15.38%.
Adani Enterprises' share price have seen both good and bad days since start of 2023, with management and leadership pulled into controversies and allegations. From the infamous Hindenburg impact that led to over 100 billion dollars of market rout, to the latest bribery allegations at chief Gautam Adani in New York court, Adani Enterprises has faced the heat significantly.
Adani Enterprises has shown resilience since 2023. After the Hindenburg report on January 24, 2023, the lowest level clocked by Adani Enterprises in 2 years was at Rs 1,017.10 apiece on February 3, 2023. Prior to Hindenburg, Adani stock was above Rs 3,400 levels and its highest level in 2 years stood at Rs 3,879 apiece which was on January 9, 2023.
Despite the shocks of Hindenburg allegations, Adani Enterprises was among top picks of mutual fund houses and major global investors like GQG Partners that restored faith, and Adani regained its Rs 3,000 mark by the end of 2023, despite the ongoing row with short seller. Currently, the stock has corrected due to latest bribery allegations on Gautam Adani that emerged in late 2024.
Furthermore, currently, Adani Enterprises is still up by 152.14% from its 2-year low, and also up by 26% from its 1-year low which is at Rs 2,030 apiece. The stock's 52-week high is at Rs 3,743 apiece. Ventura's target of above Rs 3,800, if touched in 24 months, Adani Enterprises would be near to its pre-Hindenburg era.
AEL is India's largest listed business incubators in terms of market capitalisation and is driven by the philosophy of incubating businesses in four core industry sectors - energy and utility, transportation and logistics, consumer, and primary industry. AEL has, over the years, seeded new business interests for the Adani portfolio, developed them into sizeable and self-sustaining business verticals and subsequently demerged them into independently listed and scalable platforms.
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