Adani Group planning $100 bn capex with focus on energy transition, digital infrastructure: Jefferies

Adani Group has built a strong financial underpin for this very ambitious initiative. Its FY24 performance comes with an acceptable Five Year CAGR of 27%. Moreover, its leverage ratio was reduced in all of the businesses it has undertaken, which is sensible concerning leverage management. Infra businesses were highly profitable and yielding in excess of 80% of overall EBITDA managed by group levels.

The Indian conglomerate Adani Group is eying a rather ambitious plan of investing a record USD 100 billion in the next decade, according to a Jefferies report. Out of this, two areas under question are targeted for focused attention: energy transition and digital infrastructure.

Group has built a strong financial underpin for this very ambitious initiative. Its FY24 performance comes with an acceptable Five Year CAGR of 27%. Moreover, its leverage ratio was reduced in all of the businesses it has undertaken, which is sensible concerning leverage management. Infra businesses were highly profitable and yielding in excess of 80% of overall EBITDA managed by group levels.

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This financial strength gives Adani Group the confidence to undertake mega projects. Of this, a good chunk of the $100 billion will go to energy transition. Adani Green, the renewable energy arm of the group, has laid an ambitious target of 50 GW capacity by FY30. This is quite aggressive growth for which continuous investment in new projects would be required and, simultaneously, there will have to explore new innovative solutions such as battery storage. Further, Adani Enterprises is likely to majorly be into Green Hydrogen projects—a definition of growing global interest in clean sources of energy.

Beyond energy transition, huge future potential is foreseen by Adani in digital infrastructure. They have been able to succeed in building large pan-India consumers, and connected more than 350 million subscribers to the core infrastructure platform as of today. Leveraging the existing user base, the group is thus gunning to capture more in this area of digital infrastructure. This strategy would allow them to ride the wave of the growing digital economy of the country.

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There are also some targets for the plan in respect of various group companies: Adani Enterprises, looking to ride on growth in the aviation business simply due to participation in the government's airport privatization program; and Ambuja Cements, nearing production capacity of 140 million tonnes per annum by FY28 and striving ultimately to be the most cost-efficient cement manufacturer globally. Adani Energy Solutions Ltd (AESL)  priorities lie in the growth of its transmission network; the Company has built a strong pipeline of projects secured through competitive bidding processes.

On the domestic front, Adani Green has some very exciting steps in its renewable energy generation. They already have 10.9 GW of installed capacity, and another 11 GW or so of projects under construction. The group is adding substantial new capacity in the coming years, with its ambitious target of 50 GW by FY30. This includes a 5 GW pumped hydro project that further underpins its commitment to clean energy solutions.

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In other words, an investment plan of $100 billion by Adani Group would go on to mean that India has indeed shifted considerably toward a greener, digitally more interlinked future. Their prime emphases are toward energy transition and digital infrastructure, which bespeak a very strong understanding of the changing economic landscape. Adani Group is better placed to contribute materially to the potential trajectory of key sectors in the Indian economy with a robust financial platform coupled with clarity in vision.

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