Adani Enterprises Limited (AEL) is the primary vehicle for the Adani Group’s businesses, with execution being its key strength. It is India’s largest coal trader and owns the country’s highest-selling edible oil brand. The group also built India’s largest private sector multi-product port [MSEZ – Mundra Port].
AEL expects to undertake contract mining for 1.7bn tonnes of coal over a 30-year period. Out of 70mtpa, it has signed contracts for 10mtpa, letters of intent (LOI) for 35mtpa and in-principle approvals for 25mtpa. AEL has taken a resolution to merge the promoter companies that hold the promoter stake in MSEZ with AEL. The valuations and merger ratio have not been decided yet.
Power Business – Merchant power tariffs and earnings momentum in power segment and Additional capacity in the power business will be the Key catalyst.
About 74% of its value will likely be derived from its listed subsidiaries (Adani Power Ltd and MSEZ). AEL will have substantial businesses in its parent entity and will continue to be a play on coal in particular – both contract mining and trading should contribute 17% of estimated value.
Sum of the Parts Valuation as per UBS estimates.
Adani Power Holding – Rs 370
Logistics – Rs 230
Others Edible Oil, Trading, Realty – Rs 70
10% discount for Holding company of Adani Power and Logistics (Mundra Port) = Rs 540
So sum of the parts valuation will be Rs 610 for Adani Enterprises Ltd as per recent UBS estimates.