Adani Enterprises shares: Ventura cuts AEL stock price target by 37%; here's why

Ventura Securities has cut its target price on the Adani group flagship Adani Enterprises Ltd (AEL) by nearly 37 per cent to Rs 3,801 from Rs 5,999 earlier. The domestic brokerage has retained its 'Buy' rating on the stock with a price target that still suggests 58 per cent upside over the next 24 months. Ventura's downward revision in target price came after nearly two years. Its previous target was set at around AEL’s QIP in January 2023.

A sharp volatility in Adani Enterprises share price following the Hindenburg Research episode has elevated the stock's beta, while a one-year delay in the green H2 project has further impacted DCF valuations, the brokerage said.

That said, Ventura noted that despite the stock volatility following the US Department of Justice notice in November 2024, AEL has demonstrated resilience, supported by robust fundamentals and operational strength in FY25.

"At the CMP of Rs 2,409 per share (15.1 times FY27 EV/Ebitda), we recommend BUY, offering a potential upside of 57.8 per cent over the next 24 months," Ventura said.

Ventura said even if one does not consider the value of green H2 vertical, its SOTP value comes at Rs 3,029, indicating a potential upside of 25.7 per cent. "The recent volatility in the share price has led to significant increase in the stock beta. As volatility subside beta should decrease consequently alleviating the valuations," it said.

AEL is targeting Rs 6.5-7 lakh crore in capex over the next decade for its expansion into airports, data centers, copper and green H2 & its ecosystem. This is expected to be primarily funded through debt, leading to an increase in net debt-to-equity and net debt-to-Ebitda from 1.2 times/1.7 times in FY24 to 1.8 times/2.2 times by FY27E.

"As part of fund raise, the company raised Rs 4,200 crore in Q2FY25 through a QIP with strong participation from both international and domestic investors and Rs 800 crore through its first-ever public issuance of NCDs, marking the first such public issuance by a non-NBFC private corporate in the last decade. Additionally, the airport business secured Rs 1,950 crore, and the road business raised Rs 1,124 crore, both through NCD issuances," it said.

Ventura expects Adani Enterprises Ltd's consolidated revenue to grow 17.5 per cent annually to Rs 1,56,343 crore, Ebitda 37.5 per cent to Rs 28,563 crore and net earnings 45.8 per cent at Rs 9,245 crore. Ebitda and net margins are projected to expand by 647 basis points (bps) to 18.3 per cent and 255 bps to 5.9 per cent.

"Strong growth in airports and solar/WTG businesses and revenue contribution from copper are expected to enhance financial performance and profit margins. As a result, return ratios – RoE and RoIC – are expected to improve by 563bps to 14.5 per cent and 99bps to 11.3 per cent, respectively," Ventura said.