Adani Group registers strong Q1 performance. Here's what analysts say

The Adani Group, led by billionaire Gautam Adani, has achieved impressive growth in operating profit and net profit for the quarter ending June 30.

Data reveals a 69.71 percent year-on-year (YoY) surge in the combined bottom line of group companies, reaching Rs 12,116 crore in Q1FY24, compared to Rs 7,139.55 crore in the same quarter last year.

Additionally, operating profit witnessed a robust 44.46 percent YoY increase to Rs 21,800 crore during the same period.

However, it's important to note that these figures do not include data from recently acquired ACC, Ambuja Cements, and NDTV.

Market experts on Adani Group Q1 Market experts are displaying bullish sentiments towards select Adani stocks, driven by the recent Q1 results.

However, they emphasize the significance of the upcoming market regulator Sebi's report on the Adani Group's performance for the stocks' future trajectory.

Ambareesh Baliga, a Mumbai-based independent market analyst, told Business Today that while most group companies reported favorable Q1 results, there are exceptions like Adani Wilmar.

Baliga mentioned that despite the strong performance, the stocks remain expensive from an investment perspective.

“Most of the group companies reported good numbers in the June quarter. However, there have been exceptions like Adani Wilmar. The group seems to have put the Hindenburg report behind them with the overall performance. But despite these numbers, the stocks continue to be expensive from an investment perspective,” he told the business daily.

Baliga also pointed out that the infusion of investments from marquee institutions has boosted sentiment within the group, leading to increased liquidity flows.

“Stocks are once again on traders' radar. We need to closely monitor sustainable fundraising across the group to continue with huge expansion plans they had until it was punctured by the Hindenburg report,” Baliga said.

The stocks of Adani Group companies have witnessed significant rallies, surging up to 143 percent from their respective 52-week lows earlier this year, showing a strong recovery from the Hindenburg report's repercussions.

In terms of individual companies, Adani Power exhibited remarkable profit growth, with an 83.26 percent YoY jump in net profit to Rs 8,759.42 crore in the first quarter. Adani Ports and Special Economic Zone followed with an 82.57 percent YoY increase, reaching Rs 2,114.72 crore, while Adani Green Energy reported a 50.47 percent rise, reaching Rs 322 crore.

Baliga further told Business Today that the significance of Adani Ports in the sector, predicting sustainable growth over the next decade. However, he advised caution regarding valuation levels, suggesting an entry point around Rs 650 levels.

Adani Enterprises and Adani Total Gas reported YoY net profit increases of 43.55 percent and 8.56 percent, respectively.

The consolidated bottom line of Adani Energy Solutions declined 5.88 percent YoY to Rs 175.06 crore. On the other hand, Adani Wilmar posted a loss of Rs 78.92 crore compared to a profit of Rs 193.59 crore in the same quarter last year.

Baliga noted that Adani Wilmar is another stock under observation. Despite its weak earnings, he suggested that it might be a divestment candidate within the group, potentially providing upside for investors.

It may be noted that a Bloomberg report suggested that Adani Enterprises is considering a potential sale of its 44 percent stake in Adani Wilmar, with a potential value of $2.7 billion.

ACC, Ambuja Cements and NDTV Q1 performance

The recently acquired cement majors ACC and Ambuja Cements reported significant net profit growth of 105 percent and 20.43 percent YoY, reaching Rs 466.10 crore and Rs 905.61 crore, respectively, during the April-June period.

On the other hand, NDTV posted a loss of Rs 8.13 crore compared to a profit of Rs 23.23 crore during the same period.

In recent developments, ICICI Securities upgraded Ambuja Cements and emphasized Ambuja's expansion plans.

Market confidence in Adani Group firms is on the rise, with institutional and retail interest increasing. The upcoming Sebi report is expected to further shape the direction of the group's stocks.

Kranthi Bathini, Equity Strategist at WealthMills Securities, also told Business Today about the positive growth in revenue and profit for select Adani group firms in Q1FY24.

“Select Adani group firms have shown traction in terms of revenue and profit growth in Q1FY24. The latest shareholding data highlighted that the institutional and retail confidence are coming back with respect to the Adani Group. Investors can add Adani Enterprises on every dip for the long term,” he told the publication.

“We are also positive on Ambuja Cements and Adani Energy Solutions,” he added.