Jefferies forecasts Adani Enterprises stock to rise 20%, EBITDA to double by FY28

Jefferies bets big on Adani Enterprises: Gautam Adani’s Adani Enterprises Limited (AEL) continues to solidify its reputation as a leading incubator of successful businesses within the Adani Group, according to a recent report by brokerage firm Jefferies.

The report highlights Adani Group’s flagship company’s notable growth trajectory, with an anticipated 47 per cent Compound Annual Growth Rate (CAGR) for airport earnings before interest, taxes, depreciation, and amortisation (EBITDA) from fiscal year 2024 to 2028. 

Adani Airports, boasting an approximate 23 per cent share in passenger traffic in the country and overseeing eight airports including the upcoming Navi Mumbai Airport, stands to benefit from India's burgeoning aviation sector and non-aero business opportunities, Jefferies highlighted in its report.

Similarly, the report forecasts a comparable 50 per cent EBITDA CAGR for Adani New Industries Limited (ANIL), particularly in the green energy businesses. 

AEL's strategic foray into the Green Hydrogen (GH2) sector aligns with governmental sustainability initiatives, positioning ANIL as a major value driver for the company, with GH2 production slated to commence by fiscal year 2027.

Furthermore, AEL's balance sheet strength enables it to accommodate an anticipated rise in capital expenditure, with an annual capex projection of $5-7 billion over the period from fiscal year 2024 to 2028. 

Despite potential short-term increases in net debt/EBITDA ratios, AEL is deemed well-equipped to manage such scenarios, leveraging fundraising opportunities and maintaining financial stability, Jefferies added.

The regulatory landscape appears favourable for AEL, following a recent Supreme Court order which offered a positive resolution to investigations surrounding Adani Group's activities. While SEBI's investigation is ongoing, the order signals a potential alleviation of regulatory concerns for the conglomerate.

“Key risks include project execution delays and resurgence of leverage issues, while milestones such as the commissioning of NMIAL Airport and GH2 manufacturing units are identified as potential value catalysts,” Jefferies said.

Considering these developments, Jefferies has recommended a ‘buy’, with a target price of Rs 3,800. Furthermore, it anticipates a doubling of Adani Enterprises' EBITDA from fiscal year 2023 to 2026, with a subsequent threefold increase by fiscal year 2028.