Foreign brokerage Jefferies advocates purchasing shares of Adani Enterprises Ltd., projecting a significant rise in value. The company has assigned a ‘Buy’ rating and set a target price of Rs 3,800. This optimism stems from their forecast of Adani group’s flagship company, Adani Enterprises, doubling its Ebitda from FY23 to FY26, with further tripling by FY23.
Positive Outlook on Adani Enterprises
Jefferies highlights the robust position of Adani Enterprises’ balance sheet, poised to absorb increased capital expenditures. They anticipate a substantial contribution from emerging sectors such as airports and green hydrogen, projecting these to constitute 85 percent of consolidated EBITDA by FY28, a notable increase from the current 40 percent in FY23.
Riding Industry Trends
Adani Enterprises is strategically positioned to capitalize on prevailing industry trends, particularly in new energy, sustainability, infrastructure, airports, digitization, and import substitution within India.
Value-unlocking opportunities
The brokerage firm foresees potential value-unlocking through demergers in various new business ventures over the coming years. Additionally, recent judicial rulings, notably the Supreme Court order, have alleviated concerns stemming from past investigations, providing a favorable outlook for the Adani group.
Growth Projections
Jefferies predicts a 47 percent annual growth in Airport EBITDA from FY24 to FY28E, underscoring Adani Airports’ significant market share in passenger traffic across India. Similarly, they anticipate a 50 percent EBITDA compound annual growth rate (CAGR) for ANIL (new industries/green energy business), citing Adani Group’s established reputation for scaling and executing infrastructure projects efficiently.
Financial Strength and Capex Plans
Adani Enterprises’ balance sheet demonstrates resilience, with a notable reduction in the net debt to EBITDA ratio from 6 times in FY14–18 to 3.2 times in FY23. This financial stability positions the company favorably to undertake ambitious capital expenditure plans, with projected annual capex ranging from $5–7 billion over FY24–28, signaling confidence in the growth trajectory of the Adani flagship.
Conclusion
In conclusion, Jefferies’ endorsement of Adani Enterprises underscores the company’s promising outlook, driven by robust financials, strategic investments in emerging sectors, and a favorable regulatory environment. Investors are encouraged to consider Adani Enterprises as a compelling addition to their portfolio, backed by the confidence of leading financial analysts.
