Adani shares buck trend, rally up to 5% in a slippery market

Renewed confidence among overseas investment firms has helped lift sentiment at the Adani Group counters on BSE and NSE.

Shares of Adani Group were seen outperforming in Monday's intra-day deals, with gains up to 5 per cent in an otherwise slippery market. 

Among individual shares, Adani Energy Solutions was the top mover, up over 5 per cent on the BSE. Adani Wilmar and Adani Total Gas gained around 4 per cent each. Whereas, Adani Enterprises, Adani Ports, Adani Green, Ambuja Cements and NDTV were up 1-2 per cent each.

In comparison, the S&P 500 Sensex was down 0.5 per cent (370 points) at 72,770.

Recently, Jefferies had initiated coverage on the Group's flagship firm - Adani Enterprises (AEL) with a 'BUY' rating for a target price of Rs 3,800. 

With new business of Airport and Green Hydrogen, the foreign brokerage firm expects AEL EBITDA to grow around 3x over FY24-FY28. It believes that the firm is riding on the strong industry tailwinds in new energy/ sustainability, airports, infra, digitalisation and import substitution in India.

We build the contribution of new biz scaling from 40 per cent of consolidated EBITDA (FY23) to around 75 per cent by FY26 and 85 per cent by FY28. The key risks, however, remain delay in project execution, re-emergence of leverage issues, said Jefferies in the note.

Earlier on February 13, Moody's Investors Service revised the outlook on four Adani Group companies to 'stable', a year after having revised it to 'negative' following a unverified report by US-based short seller, Hindenburg Research.

The global ratings agency changed the outlook to 'stable' on Adani Green, Adani Electricity Mumbai, Adani Transmission, and Adani Energy Solutions as the financial metrics of these companies improved significantly in the past 12 months.

Reportedly, Adani group is said to be in advanced talks with top sovereign funds based in West Asia to raise up to $2.6 billion for its airport expansion and green hydrogen projects.

According to sources, AEL may dilute part of its stake in the airport-holding firm and/or the green hydrogen business to these funds, which are keen to invest in the Indian infrastructure sector.

Meanwhile, the share of foreign loans in total Adani group debt portfolio dropped to 61 per cent by September 2023 from 63 per cent as of March 2023, as the group repaid part of its foreign loans and refinanced part of older loans.

At present, Adani Ports and Special Economic Zone has the highest foreign debt with $4 billion raised from bond investors, followed by $2.5 billion raised by Adani Energy Solutions and Adani Green at $1.57 billion, according to a presentation made by the Group to investors.

Among other group firms, Uber's CEO and Gautam Adani may collaborate for green mobility in India. That apart, Adani Green Energy on February 14 said it started generating power at its plant in Khavda, Gujarat. The company said that it has operationalised the first 551 MW solar capacity at the plant and started supplying to the national grid.

In the power space, the Competition Commission of India (CCI) has approved a proposal to acquire a 100 per cent stake in Coastal Energen Pvt by Adani Power Ltd and Dickey Alternative Investment Trust.