Adani Enterprises Returns to Profitability, Shares Climb
Adani Enterprises Ltd (AEL), the flagship company of the Adani group, experienced a 5 percent surge in its share price following its second-quarter earnings report. The company returned to sequential profitability in the September quarter, surpassing Street estimates, despite a 54.84 percent year-on-year decline in consolidated net profit, which stood at Rs 1,492.04 crore.
Brokerages Maintain "Buy" Ratings, Raise Targets
Several prominent brokerages have reiterated their positive outlook on Adani Enterprises shares. Cantor Fitzgerald, Jefferies, MOFSL (Motilal Oswal Financial Services), and IIFL all maintained their 'Buy' or 'Overweight' ratings on the stock, citing strong Q2 performance and a promising future trajectory.
- Cantor Fitzgerald suggested an 'Overweight' rating with a target of Rs 3,254.
- IIFL maintained a 'Buy' rating and set a target of Rs 3,282.
- MOFSL reaffirmed its 'BUY' rating with a revised SOTP-based target price of Rs 3,350.
- Jefferies valued AEL at Rs 3,830, based on EV/Ebitda for individual businesses.
MOFSL Highlights Business Ramp-Up and Value Creation
MOFSL noted that Adani Enterprises' Q2 earnings performance exceeded expectations, reinforcing a positive outlook. The brokerage anticipates that the ramp-up of businesses such as airports and copper will be key drivers for profitable growth. MOFSL emphasized the company's shift from capital deployment to value creation, with segments like airports, new energy, and data centers entering a scale-up phase, while mature businesses are generating substantial cash flow. As capital expenditure intensity moderates and incubated businesses move towards monetization, increased cash generation is expected to support faster deleveraging and further capital recycling.
Jefferies Sees Strong Growth in Key Segments
Jefferies reported that AEL's Q2 Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) surpassed its estimates, primarily driven by strong performance in the Airports, Copper, and 'Others' segments. This robust operating performance also translated into a significant beat in Profit After Tax (PAT). Jefferies projects Ebitda and PAT Compound Annual Growth Rates (CAGRs) of 23 percent and 48 percent, respectively, over FY26-FY31E. The airport segment is expected to benefit from recent revisions in aero tariffs, growth in non-aero business, and contributions from the Navi Mumbai International Airport (NMIAL). The data center ramp-up is also reported to be on track, with airports alone contributing 50 percent to the stock's target Enterprise Value (EV).
The collective positive sentiment from these leading brokerages underscores confidence in Adani Enterprises' diversified growth portfolio and its proven incubator model, positioning it as a leading global infrastructure platform.