The Adani Group’s market capitalization is the one topic that has created a lot of buzz in the trade sector. The returns have taken many to surprise as Adani has been positioned in the third spot on the list of the world’s richest people according to Bloomberg’s index.
The value of the entities listed by the group has surged from 16 billion USD in 2015 to 240 billion in 2022.
But Gautam Adani’s dream does not end here. He plans to take his group valuation to 1 trillion USD. All the plans were laid out in 2015.
Jugeshinder Robbie Singh, Adani group’s Chief Financial officer on 10 October, narrated an incident discussing the group’s trajectory of being among the highest net worth individuals in New Delhi.
He added that what seems like that has happened within one or two years is a result of all the plans and proposals that were carried out by Gautam Adani and, the goal was discussed in 2015.
When the discussion took place, the group’s market valuation was 16 billion USD in 2015. The group was equipped with many related companies. They believed that if they owned assets and companies of such type, they would be able to reach the benchmark of 1 trillion USD.
And, since then they planned out the steps they needed to reach the goal.
Since then, the Adani Group has focussed on building its infrastructure and logistic portfolios in a way that it could be included in the top five key players globally and not just be restricted to India’s largest key player.
Achieving the goal was not as easy as it seems. They took steps that enabled the transformation of the group’s functionality at every level.
Singh and Gautam Adani after careful planning concluded that many steps can be executed. They were confident that achieving the steps would prove to be beneficial for the Adani Group.
Even though, a lot of skepticism surrounded them, they moved on with the initiative.
Market experts have always questioned the group’s entry into the cement industry. The group has always made it clear that it would concentrate on its strengths and deviate its entire focus to the three major sectors- mining, infrastructure, and utilities.
Businesses that inclined well into the group’s portfolios will become its adjacencies.
Adani Group has realized that power and logistics are the most integral factors of any metal and material business. This enabled the group to enter into copper, aluminum, and cement businesses.
Power is one of the integral goals that is focused on by the Adani Group at present. The end of 2022 has marked the launch of Adani Green which plans to redefine the future of renewable energy.
In 2020, Adani Group became one of the largest solar power companies in the world.
Adani New Industries, which currently falls within Adani Enterprises will focus on the group’s venture in the new business.
Singh has further stated that it was the first time in Indian history a portfolio of a company was able to make it to the list of the world’s top five in the entire sector.
He added that if one takes the infrastructure portfolio of the Adani Group, then it is ranked among the top five companies in the world. In addition, Adani Green, Adani Ports, Adani Total, Adani Transmission, and Adani Power are rated in the topmost portfolios of the world. In addition, it is one of the fastest-growing portfolios.
Their primary industry verticals i.e., the metal and mining sector rank next to their infra portfolio.
It is not a matter of surprise that Adani Ports and Special Economic Zones (APSEZ) was the first company that went through a major transformation from being a port operator to becoming a key player in the integrated port services and logistics player.
Gautam Adani in his AGM speech mentioned that the financial year 2021 was a transformation year for the company. No company runs a port business of such scale and reach.
In addition, the company has added LNG and LPG to its portfolio. Data shows that Gautam Adani’s port business moves 100 billion worth of trade every year.
Gautam Adani’s entry into the cement industry:
The Gautam Adani Group’s entry into the cement business came as a surprise when they purchased Holcim’s cement business this year. Many have criticized the move of the group, but the pieces of the puzzle fit together.
The company believes that infra and energy are core components in any business whether it is building materials like paints and cement or metals, 74 percent of the total cost of the business comprises three factors: transport and logistics, power, and extraction.
The company has never focussed on the cement industry as a manufacturing business. Instead, they believe that the industry is inefficient. They believe that they will be able to incorporate efficient logistics, and power into it.
The same view was expressed by people when Gautam Adani made his debut in the copper and aluminum industry.
Singh believes that the Adani Group has all the clearances. As a result, the group will be able to provide the key materials at a better cost.
Adani Group has already achieved the position of the largest mining service in the country. This makes it possible for the company to reduce developmental costs by one-third of the value that is offered by any other company.
So, whenever the company plans on purchasing stakes, they make 100 percent of their investments in the core infra or adjacent areas. They do not make any decision that is outside the infra sector.
The Adani Group enjoys business in class margins. The port business has reported margins of 70 percent as compared to the 56 percent margins achieved by its closest competitors.
Adani’s Total Gas has reported margins of 41 percent. On the other hand, Adani transmission’s operating margins are 92 percent.
The data shows that the businesses handled by the group are efficient and profitable, which in turn generate high levels of free cash flows.
The growth is higher than some of the tech companies.
The group’s debt has gone up significantly, and so is its EBITDA. Records of the last nine years show that the group’s EBITDA has surged by 23 percent whereas its debt has increased by 12 percent.
Nearly, Gautam Adani’s 41 percent portfolios have the same rating as the government of India. The high ratings have evolved the interests of many other companies in the same sector globally, including TotalEnergies.
The latter has invested about 4 billion USD in Gautam Adani’s companies.
The Adani Group has good relationships with most of the Indian banks, but the Adani Group can no longer expand further if they are solely dependent on the Indian bank because of the group exposure limits.
It has paved the way for the European banks to develop a good relationship with Gautam Adani followed by the leading investment banks in Japan and US.
The group runs one of the largest capital equity programs that has almost the same size as Reliance Jio.
Adani Enterprise has moreover been given the position of the group’s indicator. The group is nurturing many new businesses under the aegis of AEL till the latter becomes independent and can fund their capital expenditure plans.
Gautam Adani’s wealth has significantly increased within ten years. The growth has been such rapid that Gautam Adani is the first Indian who has made it to the top five list of the richest individuals based on the Bloomberg wealth index.
The trends in the expansion of the Gujarat-based conglomerate show that he will soon reach the 1 trillion USD mark.