Gautam Adani-led Adani Group pips Tata Group to become most valuable in terms of market value

Billionaire Gautam Adani-led Adani group on September 16 surpassed the market capitalisation of Tata group to become the most valuable in the country. Data showed that the cumulative market valuation of the seven-listed Adani group of companies stood at Rs 20.86 lakh crore on September 16.  

On the other hand, the overall market capitalisation of the listed Tata group of companies was at Rs 20.72 lakh crore. Meanwhile, the benchmark equity index BSE Sensex closed 1093.22 points, or 1.82 per cent down at 58,840.79.  

According to market watchers, a favourable business environment worked for Adani group of firms, which are 100 per cent India-centric. Amid the ongoing momentum, shares of Adani Total Gas jumped 1,618 per cent in the past two years. It was followed by Adani Transmission (up 1,438 per cent) and Adani Enterprises (up 1,197 per cent). 

Other Adani Group firms, including Adani Power, Adani Green Energy and Adani Ports and Special Economic Zone also rallied 953 per cent, 246 per cent and 167 per cent during the same period. Adani Wilmar, which listed on bourses in February 2022, is also up over 100 per cent from the issue price of Rs 230. 

Kranthi Bathini, Equity Strategist, WealthMills Securities said, “Macroeconomic environment for the businesses in which Adani group of firms are quite positive in the country. In addition to this, the group is also coming up with expansion plans and the ways they are leveraging the business are helping them to emerge as the largest business model.” 

On the other hand, the sky-high valuations of Adani Group of firms are one of the major concerns among investors. Price-to-earnings (P/E) of Adani Total Gas was hovering around 786.86 on September 15. The ratio for other group firms such as Adani Enterprises and Adani Wilmar were at 471.29 times and 117.49 times.  

Commenting on valuations, Bathini said, “Valuations can be sustainable considering the favourable business environment.” On the other hand, Nikhil Gangil, Founder, Intrinsic Value said, “As a conservative investor I would prefer to stay away from Adani stocks at present valuation.” 

For the latest quarter ended June 30, 2022, the consolidated profit of all listed Adani group firms jumped nearly 155 per cent year-on-year (YoY) to Rs 6,897.85 crore. The figure stood at Rs 2,705.84 crore in the same quarter last year. On the other hand, cumulative sales of the group firms also increased by 102 per cent to Rs 79,769.97 crore during the quarter under review. 

Among the top performers, Adani Power reported 1,618 per cent growth in the bottom line in Q1FY23 on a 109 per cent rise in net sales. The net profit of Adani Enterprises and Adani Wilmar also grew 109 per cent and 19 per cent, respectively, during the same period. On the other hand, the net profit of Adani Transmission, Adani Ports, Adani Green Energy and Adani Total Gas declined 61 per cent, 22.60 per cent, 0.90 per cent and 0.40 per cent, respectively, on YoY basis. 

Gangil said, "Focus on license-related utility businesses such as gas, power, transmission and current events which have put conservative energy like coal in focus have surely helped.” 

 

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