Adani’s flagship firm near record high
Profit surge of 117% gives company more room to grow
MUMBAI: 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% to 3,833.25 rupees (US$46.5 or RM212) 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 (Rm258.7mil) for the quarter ended Sept 30, it said in a filing, compared to 2.12 billion rupees (Rm119mil) 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 (Rm21.5bil), 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 (Rm21.2bil) in the latest quarter.
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 centres 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.
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 at Sept 30, was 400.2 billion rupees (Rm22.5bil), marginally lower than 410.2 billion rupees (Rm23.1bil) 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 (Rm18.9bil) over the same period, implying growing indebtedness to external creditors.
The debt service coverage ratio, which is a marker of a company’s comfort in servicing its debt, has worsened slightly from a yearago quarter.
Earnings were announced after the close of market trading hours in India.
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 (Rm27.4mil).
This was down from 1.82 billion rupees (Rm102.3mil) 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 that its profit fell 25% to 2.06 billion rupees (Rm115.9mil) 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%.