The group’s market capitalization was approximately $16 billion in 2015 and is $260 billion in 2022 – an increase of more than 16 times in seven years.
The group’s market capitalization was approximately $16 billion in 2015 and is $260 billion in 2022 – an increase of more than 16 times in seven years.
Richest Asian Gautam Adani’s conglomerate will invest more than $150 billion in businesses ranging from green energy to data centers to airports and healthcare as it dreams of joining the elite global club of companies with a $1 trillion valuation. pursues.
On 10 October, Adani Group Chief Financial Officer Jugeshinder ‘Robby’ Singh detailed the development plans of the group, which began as a trader in 1988 and covered ports, airports, roads, electricity, renewable energy, power transmission, Gas distribution expanded rapidly. and FMCG and recently in data centres, airports, petrochemicals, cement and media at an investor meet organized by Ventura Securities Ltd. in New Delhi.
Mr Singh said the group plans to invest $50-70 billion in green hydrogen business and $23 billion in green energy over the next 5-10 years. It will invest $7 billion in power transmission, $12 billion in transportation utilities and $5 billion in the road sector.
Its foray into the data center business with cloud services will require an investment of $6.5 billion in partnership with Edge ConX and another $9-10 billion is planned for airports, where it is already the largest private sector company. is the operator. Its entry into the cement sector with the acquisition of ACC and Ambuja Cement saw an investment of $10 billion.
He said it is entering the petrochemical business with plans to set up a 1 million tonne per annum PVC manufacturing facility at an investment of $2 billion and will enter the copper sector with a 0.5 million tonne per annum smelter at an investment of $1 billion. . ,
The healthcare sector will see investments of $7-10 billion in insurance, hospitals and diagnostics and pharma, some of which will come from the Adani Foundation.
“Whatever you see today, it may look like it has happened in the last one or two years, but what we actually did is Gautam Shantilal Adani and I discussed it in 2015,” Mr. Singh said at the investor meet. did.” Adding a group is the result of a well thought out business plan that taps into the adjacencies of an existing business.
The group’s market capitalization was approximately $16 billion in 2015 and is at $260 billion in 2022 – an increase of more than 16 times in seven years.
“Looking at what we had as a group of companies, we believed that if we had that type of assets and companies we really should be a $1 trillion conglomerate. So we We went through the steps we needed to get to this point.” He added.
There are only a few companies that are worth a trillion dollars or more. These include Apple, Saudi Aramco, Microsoft, Google’s parent Alphabet and Amazon.
Mr Singh said, the Adani Group has built its infrastructure and logistics portfolio in such a way that it can emerge as not only the biggest player in India but also the top five globally.
“Look at Adani Ports, Adani Transmission, Adani Total Gas, Adani Power, when you look at these businesses, these businesses are in Total Infra and the utility portfolio was constituted by four main divisions,” he said. “This is the fastest growing infra portfolio of any comparable size. Our primary industry verticals Materials Metals and Mining again sits next to our core of infrastructure,” he added.
Explaining the rationale for the expansion, Mr. Singh said that it is prudent for a trading company to have the Adani Group in the port business. And since energy is critical to this, entering distributed energy and finally into gas to provide an integrated logistics and infrastructure portfolio.
The recent foray into metals and mining is an extension of this as logistics and warehousing is an integral part of the cement business.
Given that power and logistics are the largest components of any metals and materials business, the group sees it fit to enter the copper, aluminum and cement businesses, he said.
Stating that Shakti is central to the group’s future growth plans, Mr Singh said, Adani is the biggest bet by any Indian conglomerate in building a chain to produce hydrogen – the fuel of the future – as well as renewable energy plants. is putting
Most of the Adani Group businesses enjoy best in class margins. The ports business has reported an operating margin of 70 per cent, while its closest competitors have a margin of 56 per cent. Adani Total Gas has posted a margin of 41 per cent, while Adani Transmission has an operating margin of 92 per cent. Businesses are profitable and efficient and generate high levels of free cash flow.
On financials, Mr. Singh said the group generates earnings before interest, taxes, depreciation and amortization (EBITDA) of $8 billion. Of this, about $3.6 billion is spent on debt repayment (interest and principal). $700 million goes toward tax payments and businesses spend $1.8 billion toward capex.
While the group’s debt in absolute terms has increased, so has its EBITDA, he said, adding that in the last nine years, the group’s EBITDA has grown at a CAGR of 23 per cent, while debt has grown by 12 per cent.
Mr Singh said that the flagship Adani Enterprises is the business incubator of the group. The port, power, transmission and gas businesses were all developed by this company and when they reached a certain degree of maturity, they were transformed into separate companies and listed on exchanges.
The same approach will hold for many new businesses such as airports being developed under AEL. When they become independent and can fund their own capital expenditure plans, they will fall apart, he said.
Over the next 2-3 years, the hydrogen and airports businesses could be separated when they could become independent. “The Adani Group’s transformation is a 25-year story of growth and ambition,” he said.