About a week since the Adani Group companies’ quarterly results were announced, analysts have observed broad trends in the diversified business organization’s growth strategy which has enabled consistent and robust value creation.
From outshining its own benchmarks in operational and financial excellence across its diverse business portfolio of transport and energy utilities to asset creations, and earnings above market expectations, the group founded by first-generation entrepreneur, Gautam Adani, has maintained its decades-long track record of best growth rates across sectors.
Adani Group – Benchmark setting group-wide performance, asset creation & earning above market expectations
The most promising were the assets in the group’s energy utilities. Despite the ongoing pandemic, Adani Green Energy Limited (AGEL) the group’s renewable business added solar plants capacity of 700 MW added in YTD FY21.
This enabled improved plant availability for both its solar and wind portfolios which was further leveraged by analytics-driven Operations & Maintenance controlled by the group’s state-of-the-art Energy Network Operation Centre (ENOC).
As a result, the company in Q3FY21 witnessed, healthy rise in the solar and wind Capacity Utilization Factor (CUF) is which is the ratio of the actual electricity output from the plant, to the maximum possible output during the year.
Overall accelerated commissioning of capacities and improved plant availability led to robust financial performance. Likewise, Adani Transmission Limited (ATL), the largest private sector power transmission company in India added a transmission network of 650 ckt km, maintained more than 99.9% supply reliability reduced its distribution loss, and improved collection efficiencies.
Given its focus on customer centricity through the retail electricity business, ATL witnessed a significant rise in E-payments with more consumers switching to digital payment channels.
Next in line, Adani Total Gas Limited (ATGL), India’s largest private utility company, continued to bolster its geographically diversified portfolio in the CGD sector that includes major commercial, industrial and residential hubs.
The company’s resilient operations diversified geographic base and prudent gas sourcing delivered a strong financial and operating performance in Q3FY21. From the ease of payment in rural areas to Gas Bills on WhatsApp, ATGL’s strategic focus on customer outreach through online channels has led to significant growth in the share of digital transactions significantly.
Among the other stellar assets, Adani Ports and Special Economic Zone (APSEZ) Ltd, the Adani Group’s Ports & Logistics business continued its transformative journey.
The strong and lasting recovery demonstrated the business in Q3FY21 took it another stride closer to its evolved identity of a pure-play transport utility player.
Based on the quarterly highlights, analysts felt the company offered unparalleled value propositions given its portfolio of assets, increasing market share, and target-based focus on ESG goals.
In terms of operational excellence, the cargo throughput recorded a significant surge with a steady uptick in container, liquid and sticky cargo. This was supported by the enhanced capacity of the recently acquired Krishnapatnam Port.
While the port revenue surged on the back of improved cargo volumes, EBITDA margins expanded owing to operational efficiencies and improved cargo mix. Likewise, revenue and EBITDA of the logistics business also increased on the back of high realization and high margin new routes even as low margin routes were discontinued.
On the ESG dashboard, the Dow Jones Sustainability Emerging Markets Index ranked APSEZ 14th among 102 in the transportation and transportation infrastructure sector.
Adani Enterprises Limited (AEL), the flagship company of the group, added a new feature to its incubation story in Q3FY21 with significant developments in the group’s young airports business.
It took over operations of Ahmedabad, Lucknow & Mangalore airports and signed up concession agreements for Guwahati, Jaipur, and Thiruvananthapuram airports.
With its acquisition of majority stakes in Mumbai and Navi Mumbai airports in the final stages, Adani Airports is the largest airport operator in India in terms of the number of airports managed by it.
Given the massive mandate, global investors foresee Adani Airports to dominate the airport sector in India with a direct interface with more than 200 MN customers.
Prudent Capital Management & Strategic Partnership According to analysts, the secret to the Adani Group’s financial resilience has been its prudent capital management and sharp focus on partnering international brands with common vision and goals.
The trend was persistent even in Q3FY21 as select businesses continued to leverage these overarching strategies.
For instance, APSEZ – issued two USD bonds worth USD 800 mn at ~3% coupon with good tightening in the final pricing. In terms of strategic partnership, Adani Group’s AGEL bolstered its ties with French energy giant, Total SA by selling a 20% stake worth USD 2.5 Bn, enabling its founders to reduce their pledge shares.
The Adani Group is committed to bringing down its share pledges to insignificant levels by September 2021.
Also Watch: Gautam Adani – Success Story of India
Cover Image: ET