Adani Enterprises is the centre of everything India wants to accomplish, US brokerage firm Cantor Fitzgerald said as it gave the group an ‘Overweight’ rating and a target price of ₹4,368 per share while expecting an upside of over 50% on Adani Enterprises shares. Cantor Fitzgerald said that Adani Enterprises’ current valuation does not reflect all the parts. A publicly-trading incubator, Adani Enterprises has many business segments that will be demerged, Cantor Fitzgerald noted.
“We believe AEL’s current valuation is largely driven by three main segments: airports, roads, and its new energy ecosystem, which in our view, means investors are getting a free call option on the rest of AEL’s business, which accounted for 85%+ of revenue in FY23 and includes many businesses that are in incubation phase and will materially contribute to financials over the coming years," Cantor Fitzgerald said in a report.
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Currently, Adani Enterprises owns eight airports, seven of which are operational. Navi Mumbai International Airport (NMIA), which is slated to be completed by year-end, is under development.
“This means that shareholders, in our view, are effectively getting the other six businesses for free, which partially explains why we believe shares are attractive at current levels. Our SOTP derived price target would imply a target FY26E EV/EBITDA multiple of 23.5x, which compares to shares currently trading at 13.9x our FY26 EBITDA estimate," the report said, adding, “As we approach FY27E, when Phase 1 of its green hydrogen facility becomes operational, we expect this will serve as an additional potential catalyst to propel shares higher."
{{/usCountry}}“This means that shareholders, in our view, are effectively getting the other six businesses for free, which partially explains why we believe shares are attractive at current levels. Our SOTP derived price target would imply a target FY26E EV/EBITDA multiple of 23.5x, which compares to shares currently trading at 13.9x our FY26 EBITDA estimate," the report said, adding, “As we approach FY27E, when Phase 1 of its green hydrogen facility becomes operational, we expect this will serve as an additional potential catalyst to propel shares higher."
{{/usCountry}}On the Hindenburg report, the brokerage firm said that Adani Enterprises has taken actions to reduce liquidity risk, improve governance, and increase transparency so “at this juncture, we believe Adani is too big to ignore, and for India, we believe the country needs Adani as much as Adani needs the country.”