Adani Group : Gautam Adani’s organization will invest more than USD 150 billion in industries ranging from green energy to data centers, airports, and healthcare in order to join the exclusive global club of corporations with USD 1 trillion valuations.
On October 10, Adani Group’s Chief Financial Officer Jugeshinder ‘Robbie’ Singh detailed the group’s growth plans at an investor meeting organized by Ventura Securities Ltd in New Delhi. Adani Group began as a trader in 1988 and quickly expanded into ports, airports, roads, power, renewable energy, power transmission, gas distribution, and FMCG, and more recently into data centers, airports, petrochemicals, cement, and media.
He indicated that over the next 5-10 years, the firm plans to invest USD 50-70 billion in green hydrogen and another USD 23 billion in green energy. It intends to invest USD 7 billion in the transmission of power, USD 12 billion in transportation utilities, and USD 5 billion in road development.
It intends to invest USD 6.5 billion in cloud data centers in conjunction with Edge ConneX, as well as an additional USD 9-10 billion in airports, where it is already the largest private operator. It invested USD 10 billion in the cement sector with the acquisitions of ACC and Ambuja cement.
He stated that it intends to enter the petrochemical business with plans to develop a 1 million tonnes per year PVC manufacturing facility for USD 2 billion and that it will enter the copper sector with a 0.5 million tonnes per year smelter for USD 1 billion.
The healthcare sector initiative, which would include insurance, hospitals, diagnostics, and medicines, will see a USD 7-10 billion investment, with some of it coming from the Adani Foundation.
The market value of the group was around USD 16 billion in 2015 and is predicted to be USD 260 billion in 2022, reflecting a 16x rise in seven years. Only a few companies have a market valuation of a trillion dollars or more. Among them are Apple, Saudi Aramco, Microsoft, Alphabet, the parent company of Google, and Amazon.
According to Singh, the Adani Group has begun to build its infrastructure and logistics portfolio in such a way that it might emerge as one of the top five global players, rather than just India’s largest.
He highlighted the reasoning behind the changes, adding that Adani Group’s presence in the ports industry made sense as a trade organization. And, because energy is required for this, the shift to distributed energy, followed by gas, will result in a portfolio of integrated logistics and infrastructure.
This is being continued with the present expansion into metals and mining, as logistics and storage are essential components of the cement sector.
Given the importance of electricity and logistics to any metals and materials company, the organization has opted to enter the copper, aluminum, and cement industries, he stated.
Adani is making the greatest investment of any Indian company in developing the supply chain for hydrogen, the future fuel, as well as renewable energy projects, he said, adding that power is essential to the Group’s future growth goals.
Adani Group’s companies
The majority of the Adani Group’s companies have best-in-class margins. The ports industry has 70% operating margins, whereas its nearest competitor has 56%. Adani Total Gas’ reported margins are 41%, whereas Adani Transmission’s operational margin is 92%. The businesses are successful and efficient, with substantial free cash flow.
Singh indicated that the group’s earnings before interest, tax, depreciation, and amortization is USD 8 billion (EBITDA). A total of USD 3.6 billion is spent on debt servicing (interest and principal). Companies invest USD 1.8 billion in capital expenditures and pay USD 700 million in taxes.
While the Group’s debt has grown in absolute terms, so has its EBITDA, he said, adding that the Group’s EBITDA has grown at a CAGR of 23% over the last nine years, while debt has grown at a CAGR of 12%.
Singh describes Adani Enterprises as the group’s business incubator. This business supported ports, power, transmission, and gas enterprises, and when they reached a certain degree of maturity, they were spun out into separate corporations and traded on stock exchanges.
The same will be true for AEL’s other new enterprises, such as airports. He added that they will be divided once they are self-sufficient and capable of supporting their own capital expenditure programs. In the next 2-3 years, when hydrogen and airports are self-sufficient, they can be demerged.
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