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Profit at Adani’s flagship surges 117% on rapid expansion

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Adani Enterprises, the flagship firm for billionaire Gautam Adani’s conglomerate, posted an almost 117% rise in quarterly profit, giving it more firepower to boost investments in numerous new businesses it’s nurturing.

The Ahmedabad-based company reported a net income of 4.6 billion rupees ($55.5 million) for the quarter ended September 30, it said in a filing Thursday, compared to 2.12 billion rupees 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, 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 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 centers 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 allayed those fears saying it has been deleveraging.

The firm’s debt-equity ratio has 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 on September 30, was 400.2 billion rupees, marginally lower than 410.2 billion rupees 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 over the same period, implying growing indebtedness to external creditors. Debt Service Coverage Ratio, which is a marker of a company’s comfort in servicing its debt, has worsened slightly from a year-ago quarter.

Earnings were announced after the close of market trading hours in India on Thursday. The stock rose as much as 1.6% on Friday during trading in Mumbai, pushing this year’s surge to 111%.

Mixed bag

Other group companies have been a mixed bag in their quarterly earnings.

Earlier in the day, group company Adani Wilmar, posted a net income of 487.6 million rupees, down from 1.82 billion rupees a year ago while Adani Total Gas reported a 1.3% rise in profit.

Adani Ports & Special Economic Zone, 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 said Wednesday that its profit fell 25% to 2.06 billion rupees despite a 22% rise in revenue as costs surged.

Two more listed group companies — Adani Green Energy and Adani Power — are scheduled to report their earnings next week.

© 2022 Bloomberg

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