Adani Group back on expansion spree after robust growth, eyes $90 billion capex: Jefferies

NEW DELHI: The Adani Group saw an impressive 40 per cent EBITDA growth (year-on-year) in the financial year 2023-2024 (FY24), after its market capitalisation was hit by a short-seller report in late FY23, a Jefferies report has shown.

During FY24, the Adani Group’s EBITDA grew to Rs 660 billion, with more than doubling of Adani Power's EBITDA on capacity addition, higher volumes, merchant contribution and lower imported coal prices.

According to Jefferies, the Adani Group is back on an expansion spree and eyeing $90 billion capex over the next decade.

“Total group EBITDA grew 40 per cent YoY in FY24 (growing at more than 27 per cent CAGR). The Group raised fresh funds from equity/debt/strategic investors and promoter increased stake in group companies and group market cap rebounded,” the Jefferies report noted.

For other group companies, EBITDA growth was in the range of 16-33 per cent, except for Adani Wilmar which saw a YoY decline.

Adani Enterprises' 29 per cent EBITDA growth (YoY) was led by growth in new incubating businesses (Adani New Industries Ltd/solar, airports) and IRM trading Business.

While Ambuja Cement's EBITDA scale-up was led by a sharp uptick in unit EBITDA, Adani Port's EBITDA growth was led by 24 per cent growth in volumes.

Adani Green’s 33 per cent EBITDA growth was driven by 2.8GW capacity addition and 100bps higher CUF (Capacity Utilisation Factor).

On Thursday, India Ratings and Research (Ind-Ra) upgraded Adani Green Energy Limited’s (AGEL) long-term issuer rating to 'IND AA-’ from ‘IND A+’, saying the company’s outlook is stable.

Adani Energy Solutions’s EBITDA growth at 16 per cent was driven by new line addition and Adani Total Gas's 27 per cent YoY growth was driven by 15 per cent volume growth and gross margin expansion aided by lower gas costs, the report mentioned.

Adani Wilmar's EBITDA declined YoY due to inventory losses (dip in oil prices) and misalignment of hedges, it added.

“Adani Enterprises is scaling its captive manufacturing capacity towards starting Green Hydrogen production by FY27 and Navi Mumbai Airport appears likely to commission by Q4 of FY25 and data centre projects are scaling up,” the Jefferies analysts said.

At Adani Cement, the management continues to guide the doubling of cement capacity and scale-up in unit EBITDA to industry leading Rs 1,450-1,500/T by FY28.

“Adani Ports recently published its 5-year business road map, targeting 18 per cent EBITDA CAGR in FY24-29E. Ports EBITDA is expected to rise at 16 per cent CAGR led by expansion and ramp-up with the company targeting 1bnt cargo volume by 2030 (15 per cent CAGR),” the report noted.

Adani Green has raised its 2030 power capacity target from 45 GW to 50 GW, including 5GW Pumped hydro.

"Adani Total Gas plans to grow new business segments, including LNG station network, for transport and mining sector and EV charging facilities while Adani Wilmar is focusing on distribution expansion, ramping alternate channels and improving mix of premium brands," the report said.