Key Points
Arguing that Adani Group has become too big to ignore, US brokerage firm Cantor Fitzgerald initiated coverage with overweight rating on Adani Enterprises and a target price of Rs 4,368, which signals an upside potential of 51% from last week's close...
Despite being the 10th largest non-financial stock in India, Adani Enterprises virtually has no analyst coverage...
While noting that AEL's current valuation is largely driven by three main segments: airports, roads, and its new energy ecosystem, it said, investors are getting a free call option on the rest of AEL's business, which accounted for over 85% of revenue in FY23 and includes many businesses that are in incubation phase and will materially contribute to financials over the coming years...
Combining these three segments with corporate, which takes away Rs 1,238/share, we arrive at a valuation of Rs 3,419/share, which is ~18% above where shares currently trade," it said, adding that shareholders are effectively getting the other six businesses for free...
"We believe both EBITDA margin and FFO (funds from operations) margin will continue to improve over the coming years as utilization rates increase and incubating businesses become more mature, enabling AEL to rely less on outside capital," Cantor said...
