Jefferies, the global brokerage firm, initiated a 'Buy' call on Gautam Adani-backed Adani Enterprises (AEL), with a target price of Rs 3800 per share, indicating a 20 per cent upside.
The flagship of the Adani Group has fostered several industry-leading enterprises in the past decade and has gained recognition for its effective execution of infrastructure projects. While potential risks continue to be present such as project delays and leverage issues, Jefferies maintains a positive outlook on the growth trajectory and investment prospects of Adani Enterprises.
Jefferies outlined strategic initiatives by the Adani Group. Firstly, Adani New Industries plans to establish India's largest green hydrogen ecosystem, investing $50 billion for a capacity of up to 3MMT. Adani Airports, on the other hand, managing 23 per cent of pan-India traffic, stands to gain from government support and airport privatization.
Meanwhile, the flagship company ventured into data centers through a 50:50 partnership with EdgeConnex, anticipating robust growth in India's data center segment.
The brokerage firm forecasts annual capital expenditure exports of $5-7 billion over FY24 -28. Despite the possibility of net debt/EBITDA briefly reaching 6 times, fundraising opportunities at the business level could mitigate concerns, given the decline to 3.2 times in FY23 from over 6 times in FY14-18.
"While net debt/Ebitda may again touch 6 times in the near-term, we believe fund-raising opportunities at the business level may partly assuage it," it said.
However, as per the brokerage firm, the key risks include potential delays in project execution and the resurgence of leverage issues.
