GAUTAM ADANI-LED ADANI GROUP faced its biggest challenge in four decades of existence in FY23. A report released by research firm Hindenburg accusing it of financial fraud and stock manipulation took group market capitalisation from ₹19.18 lakh crore on January 24 to less than ₹10 lakh crore in just 10 days. The flagship company, Adani Enterprises (AEL), listed three decades ago, had to call off a ₹20,000 crore follow-on public offering, the biggest in India’s history. Gautam Adani, who had become third richest in the world with over $90 billion personal wealth in 2022, fell out of top 20 in the global rich list as his wealth shrunk to nearly half.

Despite the setback, Adani swung into action to calm investors’ nerves by reiterating that the “fundamentals of the group’s businesses are strong” and it has steady and assured cash flows to run its businesses and complete ongoing projects. The group fully prepaid margin-linked share-backed loans worth $2.15 billion on March 12 before the committed deadline of March 31. “Promoters also prepaid $500 million in facilities taken for Ambuja Cement acquisition, taking equity in Ambuja financing to $2.6 billion (out of $6.6 billion). The prepayment was done along with interest payment of $200 million,’’ according to a Jefferies analysis of Adani Group after the Hindenburg report.

The fightback has paid off. AEL ranks second fastest growing among the companies whose revenues exceed ₹10,000 crore, after Rahul Bhatia’s InterGlobe Aviation, which runs Indigo Airlines. Total income rose 104% from ₹19,217 crore in FY22 to ₹39,326 crore in FY23. Profit after tax (PAT) rose 218.45% to ₹2,473 crore, from ₹776.56 crore a year ago, helping the company report a cash balance of ₹5,373.69 crore, shows Fortune India data. The group, which has 10 listed companies, reported 85% rise in top line to ₹2,62,499 crore. PAT rose 82% to ₹23,509 crore. “Last year’s results are indisputable evidence of strength and resilience of Adani Group’s operational and financial performance. These exceptional results highlight our consistent track record of gestating and building critical infrastructure businesses,’’ says Gautam Adani.

The main triggers for AEL’s massive growth across established and incubating businesses were rise in coal trading, higher solar PV sales on account of new capacities and traction in airports business, which grew 108%, the highest among all businesses under AEL. Passenger movement doubled to 74.8 million, leading to 108% rise in revenue from ₹2,884 crore to ₹5,989 crore. India’s largest private airport operator, which has eight airports (seven are operational and one, Navi Mumbai International Airport, is under construction) added 114 routes and 45 new airlines in FY23. Improvement in operational efficiencies, space utilisation and consumer-focused offerings is driving revenues, say AEL sources. For instance, Mumbai airport has become the first in India and third in the world to receive Level IV customer experience accreditation from Airports Council International. Airport revenues grew 42% in first half of the current fiscal as passenger movement rose 29%. AEL sources say Navi Mumbai International Airport is on track to start operations in second half of FY25.

However, one of AEL’s established businesses, mining services, did not do well in FY23. Its revenues fell marginally from ₹2,360 crore to ₹2,337 crore mainly due to lower volumes from Parsa East Kente Basan coal mine in northern Chhattisgarh. But high volumes and prices in global coal market due to Russia-Ukraine conflict helped AEL’s main business, integrated resources management, whose volumes rose 37% and revenue 101%. “Global energy disruptions from geopolitical turmoil have resulted in elevated energy prices. India’s coal demand is expected to grow at a fast clip of 4.6% CAGR to 1,511 metric million tonnes by FY30, which augurs well for Adani’s coal trading and mining business,’’ says a Ventura report. Analysts expect Carmichael coal mine in Australia to scale up from eight metric million tonnes per annum (MMTPA) to 10 MMTPA by FY24.

Another established business, Adani New Industries Ltd. (ANIL), which makes solar PV cells and is developing a green hydrogen ecosystem, grew 39% from ₹2,558 crore to ₹3,567 crore, say company sources. In July 2022, the company added two gigawatts (GW) solar module manufacturing capacity and upgraded 1.5 GW manufacturing capacity. This business has picked up momentum with rise in demand for solar modules from overseas markets, especially U.S. This, along with consistent capacity addition, helped this segment report 138% growth in first half of the current fiscal to over 1,244 MW. ANIL now has four gigawatts (GW) manufacturing capacity in solar PV. It is scaling this up to six GW, apart from 1.5 GW for wind manufacturing, by 2025. Facilities for making wind turbine nose (nacelle) and hub (structure) have started commercial production. The moves are part of Adani Group’s plan to become one of the world’s lowest-cost producers of green hydrogen. The ingot pilot plant has already been completed. ANIL has also produced India’s first wafer for solar equipment manufacturing. Ventura analysts say with integrated manufacturing ecosystem being developed for producing three MMT of green hydrogen by 2030, ANIL’s revenues are expected to jump from ₹5,819 crore in FY24 to ₹92,841 crore in FY30.

That is not all. A number of new businesses are shaping up. AdaniConnex, the 50:50 JV with EdgeConnex to develop one GW data centres in Chennai, Hyderabad and Noida by 2030, has taken off with over 300 MW capacity. Ventura analysis estimates AdaniConnex’s capacity will increase from 56 MW with revenues of ₹44 crore in FY23 to 1,051 MW with revenues of ₹40,042 crore by FY30. Adani Airports plans to increase passenger traffic to 300 million by 2026. Adani Road Transport, building over 5,000 lane kilometres, aims for 14 operational projects by 2026. Adani Digital Labs, a unified digital platform catering to 400 million B2C consumers under group businesses, wants 450-500 million Adani Super App users by 2026. The water business is also taking off with first project in Prayagraj nearing commission.

Two new businesses AEL is incubating include copper, with a 500 kilo tonnes per annum plant coming up in Mundra SEZ, with option to double the capacity. The planned capex in copper will be about ₹15,000 crore. ‘’India’s import dependency in copper is 20-25%. It is expected to grow 3X in next 10 years. India’s copper consumption is estimated to be 7,10,000 tonnes. It is expected to double in next 10 years due to its extensive usage in electronics, capital goods and EVs,’’ say analysts with Ventura. Another company, Mundra Petrochem, is planning to start with one MMTPA capacity to make PVC, chlor-alkali, calcium carbide and acetylene. Analysts with HDFC Securities say PVC demand in India is set to increase 7-8% in 2023 to 3,350-3,450 kilo tonnes per annum. Over 2023 to 2027, the demand is expected to clock 8-10% CAGR, they add.

New and emerging businesses — airports, green hydrogen ecosystem, integrated manufacturing and roads — now contribute almost half to AEL’s profits. Sources say revenues from established businesses — mining, trading, ANIL, etc, were higher by ₹56,027 crore in FY23. The increase in revenue from incubating businesses, transport, logistics, airport, roads, water, data centre, etc, was higher by ₹1,1715 crore. EBITDA of incubating businesses grew 375% during the year to ₹5,043 crore. Further, in first six months of FY24, incubating assets backed EBITDA increased 111% to ₹2,825 crore and total EBITDA 43% to ₹5,874 crore.

With new businesses gaining momentum, Adani Enterprises is set to leverage them to continue its growth journey in the coming years.

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