Analyst Corner: Adani Group focusing more on B2C as against B2B

We organised a call with Adani Group CFO Jugeshinder Singh, Jeet Adani and Balasubramanyam. The group is moving to a B2C focus vs B2B, with incremental investments in airports and data centres. Adani Wilmar and Gas are existing B2C investments. Maximising ROIC/ROE is top of mind. The family owns 65% in group companies. Confidence was exhibited on replicating Adani Ports’ success of growing faster than the market across the group.

Airports a priority in logistics vs roads. Revenue streams related to passenger/non- passenger footfalls is a focus area for generating healthy returns on airport assets. Management cited an example of Ahmedabad having 80% of footfalls from non–passengers, who are generally not catered to. Strong relationships with regulators in 300+ locations across the country should help in seeing through initiatives that are in-line with the regulator’s vision. Mumbai distribution’s regulatory assets have been brought down to negligible levels within 2.5 years of taking over, as power is being supplied at competitive rates without compromising quality. Investments in road and water sectors are being evaluated on scalability and risk acceptance.

Adani Green – scale the gamechanger. 10 GW+ renewable energy capacity on one site eventually should ensure that Adani Green benefits from economies of scale on O&M, T&D, and overheads. Management mentioned that the recent solar power bid at `2/unit should not indefinitely delay the 8GW PPA signing at `2.92/unit. Manufacturing linked tender makes this project critical from a country perspective and the average SEB procurement price of `3.51/unit is well above the `2.92/ unit. Adani Power’s delisting thought process is around the cost of capital raising due to ESG concerns on coal power plants and regulatory receivables exceeding debt