Target: ₹3,801

CMP: ₹2,556

Adani Enterprises Ltd (AEL), the incubator of many successful industry leading businesses, is ambitiously diversifying into green H2 and its ecosystem to drive future growth. Despite stock volatility following US Department of Justice (US-DOJ) notice in Nov 2024, AEL has demonstrated resilience, supported by robust fundamentals and operational strength in FY25.

Over FY24-27, AEL’s consolidated revenue, EBITDA, and net earnings are expected to grow at a CAGR of 17.5 per cent, 37.5 per cent and 45.8 per cent, reaching ₹1,56,343 crore, ₹28,563 crore and ₹9,245 crore, respectively.

Strong growth in airports and solar/WTG businesses and revenue contribution from copper are expected to enhance financial performance and profit margins. As a result, return ratios – RoE and RoIC – are expected to improve by 563bps to 14.5 per cent and 99 bps to 11.3 per cent respectively.

AEL is targeting ₹6.5-7 lakh crore in capex over the next decade for its expansion into airports, data centers, copper and green H2 & its ecosystem. This is expected to be primarily funded through debt, leading to an increase in net debt-to-equity and net debt-to-EBITDA from 1.2x/1.7x in FY24 to 1.8x/2.2x by FY27E.

We recommend Buy with our SOTP-based price target of ₹3,801 (21.2X FY27 EV/EBITDA). Even if we don’t consider the value of green H2 vertical, the SOTP value comes at ₹3,029.