Adani Enterprises Shares: Ventura Securities Retains 'Buy' Call, Sees 57.8% Upside

Ventura Securities Ltd. has set a bullish target of Rs 3,801 for Adani Enterprises Ltd.'s stock, predicting a potential upside of 57.8% over the next 24 months.

The shares of Adani Group flagship entity is currently trading at Rs 2,409 apiece. The target price of Rs 3,801 set by Ventura under a base case scenario offers significant growth potential for investors.

In a bull case scenario, the target price rises to Rs 5,748, which would mark an upside of 138.6%, the brokerage said in its note.

Under the bull case scenario, "we have assumed revenue of Rs 1,66,615 crore (FY24-27E CAGR of 20%) and an EBITDA margin of 20% at an EV/EBITDA of 23.4X, which will result in a bull case price target of Rs 5,748," it stated.

Adani Enterprises, one of India’s largest business incubators, has a diversified business model that has fostered key sectoral players like Adani Ports & SEZ Ltd., Adani Green Energy Ltd., and Adani Wilmar Ltd., among others.

Financially, Adani Enterprises is on a strong growth trajectory, as per the note issued by Ventura. Over fiscal years 2024 to 2027, its consolidated revenue is expected to grow at a compounded annual growth rate of 17.5% to Rs 1.56 lakh crore.

The earnings before interest, taxes, depreciation and amortisation are projected to grow at 37.5% CAGR to Rs 28,563 crore, and net earnings are expected to climb by 45.8% CAGR to Rs 9,245 crore in the same period, according to the note.

"EBITDA and net margins are projected to expand by 647 basis points to 18.3% and 255 bps to 5.9%, respectively," it said, while adding that "return ratios – RoE and RoIC – are expected to improve by 563 bps to 14.5% and 99 bps to 11.3% respectively".

This growth will be driven by the company’s expansion of airport, solar, and wind turbine businesses, as well as revenue contributions from copper business, it added.

Favorable industry tailwinds and contributions from emerging verticals are expected to drive robust revenue growth, Ventura said. The brokerage listed the following key factors:

• New energy ecosystem: Revenue growth is expected at 49.4% CAGR to Rs 28,596 crore by fiscal 2027, supported by full backward integration in solar module manufacturing and production of India’s largest 5.2 MW WTG. Green hydrogen production, including ammonia and methanol, is expected to commence from fiscal 2028 onwards.

• Airports: Revenue growth is projected at 25.1% CAGR to Rs 15,487 crore, fueled by strong growth in air travel and higher non-passenger revenue.

• Data centers: Revenue is seen growing at 135.3% CAGR to Rs 1,942 crore, driven by government initiatives for data localization in India.

• Copper manufacturing: Additional revenue of Rs 24,500 crore is expected from its newly operational copper business, positioned as a key import substitution for India, a net importer of copper.

• Mining: Revenue is expected to grow at 23% CAGR to Rs 16,418 crore.

Adani Enterprises is targeting Rs 6.5-7 lakh crore in capital expenditure over the next decade, primarily focusing on airports, data centres, copper, and green hydrogen, Ventura said.

"This expansion will be funded through debt, which is expected to lead to an increase in the company's debt-to-equity and debt-to-EBITDA ratios over the next few years," it added.

As part of the fundraise, the company raised Rs 4,200 crore in the July-September quarter through a qualified institutional placement with strong participation from both international and domestic investors. Adani Enterprises also raised Rs 800 crore through its first-ever public issuance of non-convertible debentures, marking the first such public issuance by a non-NBFC private corporate in the last decade, the brokerage noted.

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