Adani Enterprises, Adani Energy Solutions: What's behind mixed set of Q4 results?

Ventura Securities has come out with reports on Adani Enterprises Ltd and Adani Energy Solutions Ltd (erstwhile Adani Transmission Ltd), along with three other Adani group companies namely Adani Power Ltd, Adani Green Energy and Adani Total Gas Ltd.

For Adani Energy Solutions (AESL), Ventura said the company presented a mixed financial performance, with an increase in YoY revenue but a decrease in profitability. In the case of Adani Enterprises, Ventura said Adani Enterprises Ltd (AEL) reported a lower-than-expected YoY revenue growth but despite the weakness in the IRM and road businesses, other segments
fared well, it said.

Adani Enterprises
Adani Enterprises Ltd reported lower-than-expected YoY sales growth of 3 per cent at Rs 29,180 crore, while its Ebitda and net earnings declined at a YoY rate of 7.5 per cent to Rs 3,195 crore and 38.9 per cent to Rs 449 crore, respectively. Ebitda and net margins declined 98 basis points to 11 per cent and 100 bps to 1.5 per cent, respectively.

"The revenue growth was impacted by 0.4 per cent YoY decline in IRM revenue to Rs 18,521 crore. Though IRM coal volumes grew at a YoY rate of 20.5 per cent to 24.7 mmt in Q4FY24, however, a significant decline in average per tonne realisation from Rs 9,072 in Q4FY23 to Rs 7,498 impacted the revenue growth. In addition, the company’s road segment reported a 30.2 per cent YoY decline in its revenue at Rs 2,274 crore," Ventura said.

Adani Enterprises, it said, has doubled its annual module production capacity from 2 GW to 4 GW and successfully commissioned 2 GW Ingot-Wafer plant in March 2024. In addition, the TopCon Cell line of 2 GW became operational in March 2024.

Besides, the company has commenced commercial production of wind turbine generators (WTGs). The current WTG segment's order book holds 254 sets, of which 54 sets delivered as of March 31, 2024. The construction of data centers in five key locations is advancing well.

"The recovery of passenger traffic to levels surpassing the pre-Covid era is a positive sign for the airports business.

Adani Energy Solutions
Despite a strong revenue growth, Adani Energy Solutions' EBIT grew 0.1 per cent YoY to Rs 1,154 crore in Q4FY24, due to a 34.1 per cent YoY decline in power distribution EBIT to Rs 354 crore and a reduction in the segment's EBIT margins to 14.8 per cent.

The decrease in power distribution EBIT, Ventura said, was primarily due to operating expenses related to newly commissioned projects in MUL, which is expected to normalise in the next quarter.

"In addition, power transmission EBIT reported a YoY growth of 29.5 per cent to R 799 crore, while the segment’s EBIT margins declined to 41.9 per cent during the quarter. Increase in the operational expenses on underconstruction projects impacted the operating margins," Ventura said.

The domestic brokerage said the emerging business segment of smart meters is showing promising development and is anticipated to significantly contribute to the company's revenue in the upcoming years.

In Q4FY24, Adani Energy Solutions reported the first ever revenue of Rs 291 crore. The company's pipeline of smart meters under implementation now stands at 21.1 million, encompassing 9 projects with a total contract value exceeding Rs 25,000 crore.

"Given the untapped market potential of 135 million smart meters, aligned with the government's target of 250 million by 2026, AESL anticipates a significant revenue contribution of Rs 2,722 crore from the smart metering segment," Ventura said.

Adani Power, Adani Green Energy, Adani Total Gas

Meanwhile, in the case of Adani Power, Ventura said the sharp fall in profit growth was due to higher profit after tax in the year-ago quarter that was primarily boosted by non-cash reversals, resulting from the effective implementation of the scheme of amalgamation.

In the case of Adani Green Energy, Ventura said revenue, Ebitda and PAT appeared to have fallen as AGEL received significant amounts due to past period tariff differentials and late payment surcharges, resulting from the resolution of tariff disputes with some customers in the previous fiscal year.

In the case of Adani Total Gas, Ventura said the company continued its positive financial trajectory.