Adani Group eyes $100 bn capex in next decade with focus on energy transition, digital infra: Jefferies

Ahmedabad: The Adani Group is eyeing $100 billion of capex over the next decade with major outlays on energy transition projects and digital infrastructure for the next leg of growth, a Jefferies report said on Friday.

At an investors’ meet, the Adani Group management outlined a strong FY24 operating performance -- a 27 per cent CAGR for five years -- and an improved leverage profile across businesses.

The Adani Portfolio achieved $10 billion EBITDA (including operating income) in FY24, growing over 40 per cent (year-on-year).

"More than 80 per cent of EBITDA came from infra-related businesses. Management also talked about high cash after tax (FFO) to EBITDA ratio for the businesses, with funds from operation (FFO) enough to envelop all debt maturities," the report mentioned.

According to the company, contracted EBITDA is 80 per cent of total group EBITDA and cash reserves stand at more than 20 per cent of borrowing, helping address the group's cash flow and system risk.

"The management does not see a refinancing risk at the group level, adding that effective capital management planning has been reflected in rate profile stability, with increasing duration, despite rate and forex volatility," the report said.

When it comes to digital infrastructure, the group has been able to establish multiple touchpoints with consumers across the country.

According to Jefferies, the Group expects a demographic dividend to show up, with the consumer base on Adani's core Infra platform already clocking 350 million users.

"The Group will look to capitalise on this in the medium term," it added.

For Adani Enterprises Ltd, the GH2 (Green Hydrogen) projects would be the group's most capex-heavy venture.

"The airports business should benefit from growth in traffic and non-aero trends. The company aims to bid for new airports under India's airport privatisation plan," said the report.

A copper project was recently commissioned and work on the coal-to-PVC project has begun.

"Management does not see net debt/EBITDA crossing 5 times during capex," said the report.

For Ambuja Cements, the company reiterated the timeline for 140 million tonnes per annum (MTPA) by FY28 is on track and the company continues to guide for Rs 1,500 EBITDA/T.

"The company is looking at reaching a cost of production of Rs 3,650/T by FY28 (Rs 500/T+ lower than current), which would be best in class globally. The company plans to consolidate all its cement companies under one head in the medium term, and is working to identify the best structure,” said Jefferies.

For Adani Energy Solutions Ltd (AESL), the company aims to commission Rs 170 billion under-construction transmission assets by FY26E. The company indicated a Rs 1.1 trillion tariff-based competitive bidding pipeline in 12-15 months, where AESL has a 16 per cent market share.

Meanwhile, Adani Green had installed a capacity of 10.9 GW in March, with another 11 GW projects under execution. "The company guides for 6-8 GW per year of capacity addition in FY25E and FY26E. The management reiterated their stance of raising capacity to 50 GW by FY30, including the 5GW pumped Hydro project," the report mentioned.