Adani’s Flagship Firm Near Record High After 117% Profit Surge

(Bloomberg) -- Adani Enterprises Ltd.'s shares closed just short of a record high after its quarterly profit more than doubled and gave billionaire Gautam Adani's flagship firm more firepower to boost its numerous new businesses.

The stock surged 6.8% on Friday to 3,833.25 rupees ($46.5) per share, almost touching the peak it reached in September when the company was added to the benchmark index Nifty 50. It has jumped 124% so far this year.

The Ahmedabad-based company reported a net income of 4.6 billion rupees for the quarter ended Sep. 30, it said in a filing Thursday, compared to 2.12 billion rupees in the same period last year. There were not enough brokerages issuing profit estimates for the company to derive an average forecast.

Revenue almost tripled to 381.8 billion rupees, the filing said, with multiple business divisions -- from integrated resources management to mining and airports -- surging in performance as the company's push to dominate a slew of industries starts bearing fruit. Total costs ballooned 182% to 377.7 billion rupees in the latest quarter.

Runaway Rallies

Adani Enterprises, known for incubating new businesses for the ports-to-power group that are later spun off, has been at the forefront of the breakneck expansion spree being undertaken by Asia's richest person. The conglomerate has diversified beyond coal-based businesses into green energy, cement, airports, data centers and media, spurring runaway rallies in Adani stocks. Adani Enterprises has surged more than 3,500% in the past five years. 

The company “has yet again validated its standing as India's most successful new business incubator as it continues to build on exciting ideas,” Chairman Adani said in the post-earnings statement. 

Even though some credit watchers have flagged elevated debt at the group as a concern, the conglomerate has played down those fears saying it has been deleveraging.

Improving Credit Ratios at Tycoon Adani's Flagship Allay Risks

The firm's debt-equity ratio improved to 0.32 in the September quarter compared to 0.66 at the same period last year, according to the filing. Gross debt, as on Sep 30., was 400.2 billion rupees, marginally lower than 410.2 billion rupees at the end of March. 

But the net external debt -- derived by deducting company founders' debt -- has climbed almost 18% to 335.17 billion rupees over the same period, implying growing indebtedness to external creditors. Debt Service Coverage Ratio, which is a marker of a company's comfort in servicing its debt, has worsened slightly from a year-ago quarter.

Earnings were announced after the close of market trading hours in India on Thursday.

Mixed Bag

Other group companies have been a mixed bag in their quarterly earnings.

Earlier in the day, group company Adani Wilmar Ltd., posted a net income of 487.6 million rupees, down from 1.82 billion rupees a year ago while Adani Total Gas Ltd. reported a 1.3% rise in profit. 

Adani Ports & Special Economic Zone Ltd., with the highest number of brokerages tracking it among tycoon's other companies, beat average profit and revenue forecast earlier this week. Power utility Adani Transmission Ltd. said Wednesday that its profit fell 25% to 2.06 billion rupees despite a 22% rise in revenue as costs surged.

Two more listed group companies -- Adani Green Energy Ltd. and Adani Power Ltd. -- are scheduled to report their earnings next week.

The rally in Adani Enterprises' shares supported gains in group firms, all of which closed higher. Adani Ports rose 3.5%, while Adani Power advanced 3%.

--With assistance from , and .

(Updates with closing share prices in the second paragraph.)

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