A big quarter for energy stocks can make India’s richest man even richer

Green energy bets have helped Gautam Adani climb up the world billionaires' rankings this year
A big quarter for energy stocks can make India’s richest man even richer
Photo: DIBYANGSHU SARKAR/AFP via Getty Images (Getty Images)
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India’s richest man will find millions (of dollars) of reasons to cheer this week.

Three of Gautam Adani’s infra, energy, and utility businesses—Adani Ports & Special Economic Zone, Adani Green Energy, and Adani Enterprises—are reporting earnings in the coming weeks. If the quarterly performance of companies in the same sectors is any indication, Adani, who’s already Asia’s wealthiest person, is looking to solidify his place among the world’s richest billionaires.

Adani Ports & SEZ, India’s largest private port operator and an end-to-end logistics provider, which accounts for 25% of the cargo movement in the country, already beat analyst expectations today (Nov. 1) as trade volumes fully recovered from pandemic lockdowns. The $40.6 billion renewables firm—is set to deliver sound results amid increased demand for alternative sources of fuel. The flagship Adani Enterprises, a multibagger stock which was recently included in the Nifty 50, India’s benchmark stock market index, reports its results on Thursday (Nov. 3).

A promising start to Adani’s quarterly earnings, by the digits

13: ports Adani operates, including India’s largest Mundra

69%: year-over-year profit jump to Rs1,677 crore ($203 million) in the quarter ended Sept. 30, 2020

33%: revenue jump to Rs5,211 crore ($631 million)

15%: increase in cargo volume

2%: uptick in stock on strong earnings

Image for article titled A big quarter for energy stocks can make India’s richest man even richer
Image: Ananya Bhattacharya

The industries where Adani cashed in

While it’s been a steady upward journey for the conglomerate since one of its companies first went public, the chairman’s wealth has skyrocketed in the past year. Adani has a 62% stake in Ports & SEZ business, and a 75% stake in the rest—Adani Enterprises, Adani Power, Adani Transmissions and Adani Gas.

Shares of the flagship company have more than doubled since the start of the year, and Adani Power’s have quadrupled. Adani Green has become one the most valuable companies in the country.

There are concerns about whether or not this meteoric success has legs to stand on. Ratings agency Fitch warned in August Adani’s diversification bids come with a caveat: they’re “deeply overleveraged” and on the verge of default, and while the new business endeavours are flush with cash, there’s concern around executive oversight.

The political goodwill Adani has amassed has helped him take advantage of relaxed regulations—think his foray into airports which Adani had nothing to do with—but the debt-ridden business could collapse in on themselves in the long run. Even Adani’s golden green business, which has attracted domestic and foreign investors, is yet to record a profit.

Adani’s $1 trillion green energy ambition

Having grown the bulk of its wealth from fossil fuels and mining, the Adani Group is looking to invest over $150 billion across green energy, data centers, airports, and healthcare as it harbors the dream of joining the big leagues of companies worth over $1 trillion. Currently, the cohort includes 5 US tech giants and Saudi Aramco—that’s it.

The group that got its early success in coal has been seeing success in the green space already. So, large chunks of this funding corpus have been earmarked for green hydrogen power and green energy at $50-70 billion and $23 billion respectively.

Its green efforts are spread across the world. To name a few:

⚛️ In June, Adani said it will create the world’s largest green hydrogen ecosystem alongside French energy major TotalEnergies.

🏭The group has committed $70 billion for climate change and green energy, including building three giga factories which will extend from polysilicon to solar modules, complete manufacturing of wind turbines and the manufacturing of hydrogen electrolysers

🇲🇦 Adani is looking to build wind and solar plants in the North African nation Morocco

🌞 It’s making a Rs65,000 crore investment over the next 5-7 years in Rajasthan to, among other things, build a 10,000 megawatt solar power capacity

✍️ In early October, Adani Green set up three subsidiary firms. It’s last set of earnings were promising with revenues soaring on the back of improved capacity and technology

Brief history of the Adani Group

1980s: A college drop out, Adani works as a diamond sorter and eventually starts a diamond trading business that takes off.

1988: He establishes a commodities import and export firm, which will grow to become the Adani Group—Adani holds the title of founder and chairman of the Adani Group. Adani Enterprises, the largest entity in the group, is an incubator of sorts where the various divisions start and grow until they’re spun out when they can sustain themselves.

1994: Adani Enterprises lists on BSE and NSE

1998: Adani gets into the port business, starting with Mundra Port in his home state of Gujarat, where India’s prime minister Narendra Modi also hails from

2007: Adani Ports & SEZ’s IPO

2009: Adani Power Limited’s IPO

2015: Adani Green is incorporated

2018: Demerger of Adani Green Energy and Adani Gas

2020: Adani forays into the airport business, starting with six airports

2022: IPO of Adani Wilmar, which manufactures edible oil, wheat, pulses, and more; takeover of cement maker Holcim for $10.5 billion, Adani Group’s largest-ever acquisition

Where does Adani’s net worth stand compared to other billionaires?

The earnings results come just as Adani reclaimed his position ahead of Amazon founder Jeff Bezos as the third-richest person in the world, according to a Forbes wealth tracker.

At over $130 billion, Adani’s wealth lags LVMH-fame French businessman Bernard Arnault’s by $20 billion, despite briefly holding the second spot in September. The world’s richest man, Elon Musk, is miles ahead at $223 billion.

Adani’s recent climb was courtesy Indian bourses outperforming Wall Street. Of course, it helped that Amazon’s weak holiday forecast crippled Bezos’ wealth. But there’s a more robust reason that’s helped the 60-year-old Indian tycoon make his way up from the 14th position he held at the start of 2022: a burgeoning conglomerate whose market cap has grown 16-times in seven years to reach $220 billion, and more targetedly, a string of lucrative green investments.

Person of interest: India’s other mega-billionaire, Mukesh Ambani

Adani’s not the only Indian businessman with a keen eye for all things green energy and profits. He’s locked in a renewables race with Reliance Industries’ Mukesh Ambani who, with an estimated $89 billion net worth, featured in the eighth spot of Forbes’ real-time billionaires index.

Reliance has been trying to transition to green hydrogen since before Adani stepped into the ring but the latter has quickly caught up. They both see multiple business cases to cater to green energy needs including rising demand for renewable, supportive government policies in India, and compliance with ESG (environmental, social and governance) factors.

But for all their green push, both businessmen aren’t letting go of coal just yet.

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