Adani Stocks to Buy Now? Jefferies Issues Bullish Ratings

Jefferies, the US-headquartered investment bank and financial services firm, has recently turned bullish on Adani Group, India’s largest infrastructure developer. Following a stellar performance in the fiscal year 2024 (FY24), Jefferies has recommended a ‘BUY’ for four of the group's companies: Adani Enterprises, Adani Ports, Adani Energy Solutions, and Ambuja Cements.

Jefferies Bullish on Adani Group: "Buy" Ratings Fuel Growth Outlook

Despite a challenging FY23 due to a critical short-seller report, Gautam Adani Group has demonstrated remarkable resilience and emerged stronger. The Jefferies report, authored by eight analysts, highlights a 40% year-on-year increase in the group's EBITDA for FY24, a key profit metric for infrastructure companies. Furthermore, the group's leverage ratio has improved to a multi-year low, indicating better debt management and financial health.

The report emphasizes the group's strategic focus on containing debt and reducing founders' share pledges. It notes that Adani Group raised fresh funds through equity, strategic investors, increased promoter stakes, and debt instruments. This financial maneuvering, combined with a rebound in the group's market capitalization, has positioned Adani Group for robust growth.

Adani Group's Ambitious Expansion Plans

Adani Group is embarking on an ambitious expansion spree, eyeing a capital expenditure (capex) of USD 90 billion over the next decade. This substantial investment is expected to fuel the group's growth across various sectors, including green energy, infrastructure, and manufacturing.

Adani Group Companies Outlook For FY 25

Adani Enterprises Outlook

Adani Enterprises is set to scale its captive manufacturing capacity towards green hydrogen production by FY27. Additionally, the Navi Mumbai Airport project is progressing well and is expected to be commissioned by March FY25. The company is also expanding its data center projects, indicating a diversified approach to growth.

Ambuja Cements Outlook

Ambuja Cements is on track to double its cement capacity by FY28. The management aims to scale up unit EBITDA to industry-leading levels of Rs 1450-1500 per tonne. This strategic focus on efficiency and capacity expansion positions Ambuja Cements for significant growth in the coming years.

Adani Ports Outlook

Adani Ports has recently outlined a five-year business roadmap, targeting an 18% EBITDA compound annual growth rate (CAGR) from FY24 to FY29. The company's EBITDA is projected to rise at a 16% CAGR, driven by expansion and ramp-up initiatives. Adani Ports aims to handle 1 billion tonnes of cargo volume by 2030, representing a 15% CAGR.

Adani Green Energy Outlook

Adani Green Energy has revised its 2030 power capacity target upward from 45 GW to 50 GW, now including 5 GW of pumped hydro. This ambitious target underscores the company's commitment to leading the renewable energy sector in India.

Adani Total Gas Outlook

Adani Total Gas is diversifying its business segments, including the development of an LNG station network for the transport and mining sectors and EV charging facilities. This strategic expansion is expected to drive long-term growth and sustainability.

Adani Wilmar Outlook

Adani Wilmar focuses on expanding its distribution network, ramping up alternative channels, and improving the mix of premium brands. These initiatives are designed to enhance market penetration and profitability.

Jefferies' ‘BUY’ Recommendations for Adani Group Stocks 

Based on its comprehensive analysis, Jefferies has issued 'BUY' recommendations for four Adani Group companies with the following target prices:

• Adani Enterprises: Current Market Price (CMP) Rs 3366, Target Price Rs 3800
• Adani Ports & SEZ: CMP Rs 1416, Target Price Rs 1640
• Adani Energy Solutions: CMP Rs 1122, Target Price Rs 1365
• Ambuja Cements: CMP Rs 629, Target Price Rs 735

The Jefferies report reflects a strong confidence in the Adani Group's strategic direction, financial health, and growth potential. With a focus on debt reduction, expansion, and diversification, Adani Group is well-positioned to capitalize on emerging opportunities in the infrastructure and energy sectors.

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