Adani Enterprises: Q2-25 Earnings Call Highlights
Emerging core infrastructure business driving growth. Capex investments expected to fuel the momentum. Some analysts concerned about pace of expansion. Management confident in its strategy & execution
adani.com | NSE: ADANIENT
1. Key Takeaways
1.1 TLDR
The earnings call conveyed a positive message about AEL's performance and future prospects.
The company's focus on emerging core infrastructure businesses is driving significant growth, and the planned capex investments are expected to further fuel this momentum.
While some analysts expressed concerns about the pace of expansion and potential risks, AEL management appeared confident in its strategy and execution capabilities.
1.2 Operational Highlights:
Financial Performance:
Adani Enterprises reported its highest-ever EBITDA of ₹8,654 crores for the half-year ended September 30th.
Highest-ever EBITDA of ₹8,654 crores
Consolidated EBITDA up 47% YoY
Consolidated profit before tax up 137% YoY
Consolidated income up 15% YoY
Emerging core infrastructure businesses, including green hydrogen, data centers, airports, and roads, recorded a half-year EBITDA of ₹5,233 crores, representing an 85% year-on-year increase.
Total income for H1 FY25 increased by over 63% to ₹17,287 crores
Profit before tax increased by 138% to ₹2,878 crores
Incubating businesses saw a 63% jump in total income to ₹17,287 crores and a 138% surge in profit before tax to ₹2,878 crores for the first half of FY25.
Key Business Updates:
Renewable Energy: Wind turbine manufacturing crossed the 300 blade production milestone.
Received a letter of award for a 101.5 MW electrolyzer manufacturing facility, bringing the total awarded capacity to 300 MW.
Airports: Adani Airport Holdings handled approximately 23% of India's passenger traffic during the quarter.
Navi Mumbai Airport's southern runway was successfully tested and is expected to be operational by early 2025.
Roads: Two additional road projects were completed, bringing the total to six.
Eight remaining projects, including the Ganga Expressway, are progressing on schedule.
Mining Services: Received a letter of award for the development and operation of a 7 million tonnes per annum iron ore mine in Odisha.
Signed an MDO agreement for a coal mine in Maharashtra, increasing Aani's MDO portfolio to nine coal and two iron ore blocks.
Mining services dispatch increased by 32% to 8.2 million metric tonnes.
Capital Expenditure:
Total FY25 capex is expected to reach around ₹67,000 crores.
The slower capex deployment in the first half was attributed to the extended monsoon season.
Segment-wise FY25 capex:
New industries: ₹28,000 crores
Airports: ₹16,000 crores
Roads: ₹12,000 crores
Data Centers: ₹5,000 crores
Other businesses: ₹5,000 crores
1.3 Key Themes:
Strong Financial Performance: Adani Enterprises (AEL) reported its highest-ever EBITDA of ₹8,654 crores, driven by strong growth in emerging core infrastructure businesses (85% YoY increase). Consolidated EBITDA was up 47% YoY, profit before tax up 137% YoY, and total income up 15% YoY.
Focus on Incubation Portfolio: AEL continues to focus on its emerging businesses, including green hydrogen, data centers, airports, and roads. These businesses are showing significant growth and are expected to be key drivers of future performance.
Green Hydrogen: Focus on integrating the manufacturing ecosystem to enable green electron production for green hydrogen.
Detailed updates on the first two phases of manufacturing and green power generation expected by mid-FY26.
Downstream product development updates anticipated within the next 24 months.
Data Centers: Adani is positioning its data center business to cater to the growing demand for ultra-hyperscale data centers, including those for AI and high-performance computing.
A comprehensive data center showcase presentation is planned for the annual results announcement in May FY26.
Airports: City-side development projects are underway, with the first expected to be operational by 2026.
Navi Mumbai Airport is anticipated to begin operations in Q2 2025.
Tariff increases for the six PPP airports are expected to be implemented between January and June 2025, with the remaining three starting in mid-2026.
Mining Services: MDO volume guidance for FY25 has been revised to approximately 40 million tonnes, down from the initial estimate of 45 million tonnes.
FY26 MDO guidance is expected to be around 50 million tonnes, plus or minus 4-5%.
Carmichael mine production is maintained at 12 million tonnes for FY25 and 15 million tonnes for FY26.
1.4 Future Outlook:
Continued focus on incubating and scaling emerging businesses
Data center business geared up for AI and high-performance computing
International airport business not a material focus in the medium term
Copper business expected to contribute meaningfully to revenue in the coming quarters
Coal to Polyvinyl Chloride (PVC) project on schedule for December 2026 commissioning
Adani Enterprises Q2 FY25 Earnings Call FAQ
About Adani Enterprises
Adani Enterprises Limited (AEL) is an Indian multinational conglomerate headquartered in Ahmedabad. It is the flagship company of the Adani Group, one of India's largest business conglomerates. AEL's diverse business portfolio includes coal trading, coal mining, oil and gas exploration, ports, multi-modal logistics, power generation and transmission, edible oil, and real estate.
This FAQ summarizes the key points discussed during the Q2 FY25 earnings call for Aani Enterprises, held on October 26, 2024.
1. What were the overall financial highlights for Adani Enterprises in Q2 FY25?
AEL recorded its highest-ever EBITDA of ₹8,654 crore in the first half of FY25. The emerging core infrastructure businesses, which include green hydrogen, data centers, airports, and roads, saw a significant increase in EBITDA, reaching ₹5,233 crore, up 85% year-on-year. Consolidated EBITDA for the first half of FY25 grew by 47% to ₹8,654 crore, while profit before tax jumped 137% to ₹4,644 crore. Total income also surged by 15% to ₹49,263 crore.
2. What is the expected capital expenditure (CAPEX) for Adani Enterprises for the full year FY25, and how is it allocated across different segments?
The projected CAPEX for FY25 is around ₹67,000 crore. The segment-wise allocation is as follows:
Adani New Industries: ₹28,000 crore
Airports: ₹16,000 crore (includes completion of Navi Mumbai Airport)
Roads: ₹12,000 crore
Data Centers: ₹5,000 crore
Other Businesses: ₹5,000 crore
Note: The CAPEX in the first half of the year was lower due to the extended monsoon season, which slowed down construction activities. However, it is expected to ramp up significantly in the coming quarters.
3. Can you provide an update on the progress of Adani New Industries (ANI), particularly in the green hydrogen ecosystem?
AEL continues to make progress in its green hydrogen business. Key developments include:
Wind Turbine Manufacturing: AEL has achieved a production milestone, exceeding 300 wind turbine blades.
Electrolyzer Manufacturing: AEL has been awarded contracts for electrolyzer manufacturing facilities with a total capacity of 300 MW per annum.
Solar Panel Manufacturing: AEL has fully integrated its solar module manufacturing ecosystem, with ingot, wafer, and ancillary industries now operational.
AEL expects to provide further updates on the development of its green hydrogen ecosystem, including green power generation capacity, in mid-2025.
4. What is the latest on the Navi Mumbai Airport project, and how is AEL planning to expand its airport business?
The Navi Mumbai Airport is expected to be completed in early 2025. The southern runway has already been tested. AEL continues to expand its airport operations, adding six new routes, six new airlines, and 13 new flights across its seven operational airports during the quarter. City-side development projects at Ahmedabad airport are underway, with the first phase expected to be operational by 2026.
5. Is AEL planning to enter the AI supply chain or the AI market?
While AEL recognizes the growth potential of AI, it is not currently planning to enter the AI supply chain. The focus for the next five years remains on the incubation and development of its existing core infrastructure businesses: airports, green hydrogen, roads, and data centers. However, AEL is investing in its digital infrastructure and service businesses, including digital labs and global capability centers, which will leverage AI and smart systems.
6. What is driving the increase in EBITDA in the road segment?
The improvement in EBITDA in the road segment is primarily due to the achievement of commercial operations for two road projects during the quarter. This has allowed AEL to recognize the full EBITDA potential of these projects.
7. What is the outlook for Adani's mining services and integrated resource management (IRM) businesses for the remainder of FY25?
AEL expects volume trends in its mining services and IRM businesses to remain flat or slightly increase for the rest of FY25. Production at the Carmichael mine in Australia is currently running at approximately 15 million tonnes per year. While AEL had initially guided for 45 million tonnes of MDO (mine development and operations) for FY25, it now expects this figure to be closer to 40 million tonnes.
8. Can you explain the rationale behind Adani India Infra Limited’s acquisition of a construction company?
Contrary to some media reports, Adani Enterprises is not acquiring a construction company. It is Adani India Infra Limited (AIIL), AEL’s subsidiary responsible for construction and assurance activities, that is making the acquisition. This move aims to strengthen AIIL's construction capabilities and ecosystem, supporting the increasing CAPEX requirements across the Adani Group
Source: Link to Earning Call Recording
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