Adani Ent stock up as Abu Dhabi-based IHC raises stake to above 5%

Shares of Adani group's flagship company Adani Enterprises Ltd are trading in positive territory despite negative broader market after Abu Dhabi-based conglomerate International Holding Company(IHC) raised its stake in the company to above 5%.

Adani Enterprises, in a statement, says the company is "delighted with IHC's decision to enhance its investment in Adani Enterprises Ltd (AEL), which further validates AEL's standing as a global leader in incubating new businesses, particularly in sustainable infrastructure, developing global aviation infrastructure and equitable energy transition".

Adani Enterprises sees IHC’s increased stake as a "ringing endorsement" of the company's "robust capex plans, governance, and transparency".

"This inter-generational relationship with IHC reflects well on India’s dynamic growth potential and offers substantial returns to our stakeholders," an Adani group spokesperson says.

In a filing to the Abu Dhabi Stock Exchange, IHC says it has "increased its stake in Adani Enterprises Ltd (AEL) to above 5%".

"This strategic increase reflects IHC's conviction in the world-leading incubation model of AEL and we believe that the inherent strength of airports, data centers, green hydrogen, and various other verticals being incubated under AEL and that AEL is poised to uniquely capitalise on India’s robust growth journey."

IHC will continue to explore unique investment opportunities in India, with the goal to maximise stakeholders’ return, the company adds.

The current decision of IHC comes in the wake of its recent announcement to dispose of its FDI investment in Adani Green Energy and Adani Transmission.

"Under the overall portfolio rebalancing strategy of IHC, Green Energy Investment Holding RSC Ltd and Green Transmission Investment Holding RSC Ltd, subsidiaries of IHC Capital Holding LLC, have entered into a definitive agreement with a buyer to dispose of its FDI investment in Adani Green Energy Ltd and Adani Transmission Ltd," IHC said on September 29, 2023.

The Adani Enterprises stock, meanwhile, opened a gap-up at ₹2,404 and surged to an intra-day high of ₹2,415 on the BSE. The stock is trading 57% down from its 52-week high of ₹4,189.55 touched on December 21, 2022. At the current share price, Adani Enterprises' m-cap is at ₹2,73,429 crore.

The stock has fallen 2.07% in the past week; 2.87% in the past month; but has surged 41.33% in the past six months. In the year-to-date and one-year periods, the stock has fallen 37.52% and 25.80%, respectively.

The net profit of Adani Enterprises rose 44% year-on-year to ₹676 crore for the quarter ended June compared with ₹469 in the year-ago period, while its revenue dropped 38% year-on-year to ₹25,438 crore in the first quarter on YoY basis. Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 47% year-on-year to ₹2,896 crore on strong operational growth.