Adani Transmission snaps 8-session losing streak; here’s why

Shares of Adani Transmission, a flagship company of Adani Group, rose over 1% in intraday trade on Monday, which for now puts them on track to snap an eight-session losing streak. The share price of Asia’s richest man Gautam Adani-led power transmission firm has fallen nearly 17% in the last eight trading days as compared to a 0.7% gain in the BSE benchmark Sensex.

Adani Transmission shares witnessed a trend reversal on Monday after its subsidiary, Adani Electricity Navi Mumbai (AENM), applied to the Maharashtra Electricity Regulatory Commission (MERC) for an electricity distribution licence in Navi Mumbai, Kharghar, Panvel and Thane districts. The Adani group, which entered power distribution in Mumbai suburbs four years ago with the ₹18,000-crore acquisition of Anil Ambani Group’s Reliance Energy, plans to invest ₹5,700 crore over five years for expanding its electricity distribution in the metropolitan region.

Extending its losing streak, Adani Transmission shares opened lower at ₹2,720 against the previous closing price of ₹2,739.55. The stock regained some ground during the session and rose 1.1% to hit an intraday high of ₹2,770. At the time of reporting, the share price was quoting at ₹2,742.65, up 0.11%, while the market capitalisation stood at ₹3.05 lakh crore.  

The share price of the Ahmedabad-based company has given a positive return of 45% to its shareholders in the past one year, while it has climbed nearly 27% in the six month period. The Adani Group stock, however, lost momentum in the last two months and nosedived over 35% from its 52-week high of ₹4,238.55 touched on September 16, 2022. The largecap stock has hit a 52-week low of ₹1,652 on December 31, 2021.    

The recent decline in Adani Transmission shares was partially due to weak September quarter earnings. For the July-September quarter of the current fiscal, the company reported 32.7% year-on-year (YoY) decline in consolidated net profit to ₹194.47 crore despite a 22.3% rise in revenue from operations to ₹3,032.07 crore over the same period last year.

As per the company, the profit was not comparable due to adverse forex movement (MTM) of ₹138 crore (mark-to-market adjustment on foreign currency loans) from ₹6 crore gain in the corresponding quarter in the Adani Electricity Mumbai (AEML) business. The growth in revenue was attributed to higher energy demand and operationalisation of new transmission lines.

In Q2 FY23, Adani Transmission operationalised 352 circuit km (CKM) and maintained system availability at 99.76%, while energy demand (per unit sold) rose 13% YoY to 2,233 million units during the period under the review.

Segment wise, the revenue of the transmission business climbed 10.1% YoY to ₹868 crore, while that from the distribution business was up 28% YoY to ₹2,164 crore. On the operational front, total EBITDA rose 5.6% to ₹1,362 crore, from ₹1,289 crore in the corresponding period last year.