Gautam Adani
Brokerage estimates have come on the companies of Adani Group, the country's leading business group. Jefferies has increased the target prices for Adani Power, Adani Ports and Special Economic Zone and Adani Enterprises. The brokerage has maintained 'Buy' rating on these three companies.
The main reasons for Jefferies' trust in these companies are their strong operational performance, capacity expansion and better realization in all businesses. This rating reflects the brokerage's confidence in volume growth, EBITDA growth and strategic decisions amid growing demand in ports, power and various infrastructure sectors.
Adani Port
Jefferies has increased the target price of Adani Ports from Rs 1,825 to Rs 1,980. The brokerage has valued it at 17 times March-28E EV/EBITDA, which is in line with FY27 trading multiples. EBITDA for March-26Q was 9% higher than expected. The reason for this was 9% year-on-year (YoY) increase in realizations from domestic ports. At the same time, management has estimated 9-14% year-on-year growth in EBITDA in FY27E, while Jefferies' estimate was 11%.
Addition of new capacities like NQXT Terminal and Colombo West Terminal along with Power Ministry guidelines and possible improvement in coal imports through Tata Power's Mudra PPA are the main factors driving volumes for the FY27 estimate. Along with this, a target has been set to achieve 18% EBITDA CAGR during FY26-31 estimate.
Adani Power
The brokerage has increased the target price of Adani Power from Rs 185 to Rs 255. For this, the FY28E EV/EBITDA multiple has been kept at 20 times, which is a premium of 100 bps over NTPC. This estimate is based on the expectation of 23% EBITDA CAGR during FY26-29. The main reason for this is that according to estimates, the company's capacity will double to 30.7GW by FY30. EBITDA for the March quarter was 7% higher than expected. The reason for this was better utilization and realization. Recently, a power purchase agreement has been signed for 8.2 GW capacity at the rate of Rs 5.8-6.3 per unit. Earlier this rate was less than Rs 5.5 per unit.
These new agreements are expected to increase the company's profits during FY28-30. Despite a 2% increase in power demand, PLF remained stable at 74% year-on-year. At the same time, the share of sales in the merchant market remained at 19% of the total volume, which helped the company maintain stable blended realization.
Adani Enterprises
Jefferies has increased the target of Adani Enterprises from Rs 2,600 to Rs 2,800 through SOTP. In this, the contribution of airports and ANIL will be 75-80% of EV with 14% EBITDA/PAT CAGR during FY25-28E. March quarter EBITDA increased 3-4% year-on-year to Rs 44.8 billion.
The main reasons for this were 75% growth in airports on annual basis (YoY), 6% growth in ANIL and strong performance of copper segment. However, there was a decline in trading and mining services. Management aims to achieve additional EBITDA of more than Rs 30 billion in FY27. This target will be accomplished by the expansion of Navi Mumbai Airport, Kutch Copper and roads, the condition of which is expected to stabilize after FY26. For this, a capital expenditure of Rs 400 billion has been earmarked.
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