Adani Enterprises storms into top-10 most-valued firms club; stock soars 3%

Adani Enterprises, the flagship company of Adani Group, entered the top-10 most valued companies league in terms of market captialisation (market-cap) in India as the stock rallied nearly 19 per cent in the last one week.

The stock hit a new high at Rs 3,967, on gaining 3.5 per cent on the BSE in Monday’s intra-day trade. The stock quoted higher for the eight straight trading day, and has rallied 20 per cent during the period. In the past one week along, the stock has surged 19 per cent, as compared to 0.45 per cent rise in the S&P BSE Sensex and 0.85 per cent gain on the Nifty 50.

At 10:06 am, with a market-cap of Rs 4.52 trillion, Adani Enterprises stood at 9th position in the overall market-cap ranking, the BSE data showed. Today, the company surpassed fast moving consumer goods (FMCG) company ITC and housing finance firm Housing Development Finance Corporation (HDFC) in market-cap ranking.

In July-September quarter (Q2FY23), Adani Enterprises’ consolidated net profit more-than-doubled versus last year to Rs 461 crore. The company’s consolidated revenue, too, climbed nearly threefold year-on-year (YoY) to Rs 38,175 crore. Consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) increased 69 per cent YoY to Rs 2,136 crore.

"The robust growth in the topline and operational performance was on account of strong earnings show by integrated resource management business and airports vertical," the company said.

Adani Enterprises’ strategic business investments are centered around green hydrogen ecosystem, airport management, roads, data center and primary industry like copper and petrochemicals, all of which have significant scope for value unlocking. Through Adani New Industries Ltd (ANIL), the group’s recent incubator in the production of renewable energy like green H2 and downstream products (ammonia, urea & methanol), Adani Enterprises (AEL) aims to emerge as the world’s primary leader in the green H2 ecosystem.

Analysts at Ventura Securities have ‘Buy’ rating on AEL with target price of Rs 4,310 per share. This sharp re-rating has been on the back of the strong visibility around the green H2 ecosystem (that is being built at a brisk pace) and the inclusion of AEL in the Nifty50 stocks, which has triggered a slew of new demand, the brokerage firm said in its September report.

The rapidly changing geopolitical situation, especially in Europe, has raised the imperative for hastening the implementation of alternate green energy sources. As such the visibility around 2.5 mmtpa of green H2 production too has got upended, it added.

Apart from the above, the brokerage firm believes that AEL will be exploring green energy opportunities across the globe and any announcement towards the same can lead to further rerating of the stock, beyond their estimates. Another trigger on the anvil for a re-rating is the possibility of a stake sale to a strategic investor in the airports business and declaration of a timeline for its listing, it added.

Technical View

Bias: Positive

Target: Rs 4,130

Support: Rs 3,800

The stock has surged over 18 per cent in just five trading sessions so far this month. Coincidentally, the sharp up move took place after the stock conquered its 50-DMA (Daily Moving Average) on the daily chart.

The daily chart structure looks fairly bullish with the stock now trading above its higher-end of the Bollinger Band for the fifth straight trading session. The bullish bias is likely to remain intact as long as the stock sustains above Rs 3,800-level.

As per the weekly chart, the stock seems on course to test the higher-end of the Bollinger Bands, indicating an upside target of Rs 4,130. 

Key momentum oscillators like the MACD and the Directional Index are favourable both on the daily and the weekly charts. The RSI, however, is in overbought zone; hence some profit-taking at higher levels cannot be ruled out.

(With inputs from Rex Cano)