This Adani Group Stock Gets ‘Buy’ Rating For 20% Upside, Given 1577.48% Returns In 3 Years

Stock outlook

Stock outlook

The current market price (CMP) of Adani Enterprises Ltd. is Rs 2,353.50 per share after closing on Wednesday, it was opened at Rs 2,365.65 per share. The 52-week low of the stock was recorded on July 19, 2021, at Rs 1,332.75 whereas, its 52-week high was recorded on April 27, 2022, at Rs 2,420.95 per share.

It is a large cap stock with a market capitalization of Rs 277,758 crore. The ROE of the stock is 3.59%. PE ratio is 357.67 and the PB ratio is 10.32. I+The TTM EPS is Rs 6.58. Its face value is Rs 1.

The stocks of the company in the last 1 week have gained 3.55%, and 13.16% in the past 1 month, respectively. Over the last 1 year, the stock has gained 66.01%. It has given multibagger returns of 1,577% in 3 years and 1,571.52% in 5 years, respectively.

Ventura Securities views On Adani Enterprises Ltd views

Ventura Securities views On Adani Enterprises Ltd views

The brokerage stated, “On 9th Dec 2021, we initiated coverage on the listed business units of Adani Group which included Adani Enterprises Ltd (AEL). Post our coverage, AEL has undertaken several initiatives that warrant detailed coverage. Through Adani New Industries Ltd (ANIL), the group’s recent incubator in the production of renewable energy, green H2 and downstream products (ammonia, urea & methanol), AEL will emerge as the world’s primary leader in the green H2 ecosystem. ANIL has a vision to be the lowest cost producer of green H2 and in partnership with TotalEnergies, we expect this platform to be extended to the global theatre in the forthcoming future. ANIL will be leveraging TotalEnergies balance sheet to help lower cost of funds.”

The brokerage added, “Apart from ANIL, AEL’s other incubating businesses, in the domains of Airports, Data Centers, Roads and Defence are on the verge of gaining traction and should be value accretive in the short to medium term. AEL’s new incubating forays into copper and green PVC have significant drivers in place to ensure long-term profitability and the equity contribution is expected to be funded from internal accruals.”

“The existing coal ecosystem (captive mines, IRM and MDO) has favourable tailwinds which will endure the already appreciated energy pricing (post the Russia-Ukraine conflict). The favourable pricing environment has ensured that the break-even for the Carmichael mine is upended and profitability should be realized sooner,” the brokerage added.

Brokerage suggests buy the stocks for a target price of Rs 2,821/share

Brokerage suggests buy the stocks for a target price of Rs 2,821/share

The brokerage said, “Given the favourable outlook across all business segments, we value AEL at Rs 2,821 per share based on our SOTP valuation methodology. This represents an upside of 25.7% from the current CMP of Rs 2,245. We believe that a demerger of the incubating business can result in significant value unlocking and is an upside risk to our estimates. A case in point is the 153% appreciation in the stock price of Adani Wilmar Ltd post-IPO. We expect the airport business to be the next value-unlocking story that should play out over the next couple of years.”

Risk to Buy Call

Risk to Buy Call

According to the brokerage, the Risks to their upside thesis are (i) an unexpected downturn in the economy, (ii) delay in project execution and (iii) project finance. Historically, AEL has proven adequately its project execution skills with timely delivery and capital management discipline. Hence in our view, the risk factors are significantly diluted.

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