(Oct 28): Billionaire Gautam Adani-controlled Adani Enterprises Ltd returned to profit in the second quarter as newer businesses including airports and data centres scaled up.
Net income was 14.9 billion rupees (RM639.95 million) for the three months ended Sept 30, according to an exchange filing on Wednesday. While that is 55% lower than the year-ago profit, the performance marks a return to black after the company had reported a loss of 11.6 billion rupees in the previous quarter amid costs linked to settlement of US legal cases.
Revenue climbed 75% year-on-year to 372.2 billion rupees and costs rose 71% to 360.2 billion rupees, the filing showed. Shares of the Adani Group flagship slipped 0.4% after the earnings were announced, in line with the fall in the S&P BSE Sensex.
The return to profitability could ease investor concerns about funding requirements for expansion and that newer businesses are approaching an earnings inflection point. Airports, data centres, roads and clean-energy ventures are expected to play a growing role in Adani Enterprises’ profit mix as they start generating cash flow.
Revenue from the integrated resources management — a unit that mostly consists of coal trading and contributes the most to the company’s overall revenue — rose 6.6% to 70.97 billion rupees. The airports business is surging in the mix, with its revenue rising 15% to nearly 37 billion rupees. New energy and commercial mining units also posted rising revenue from year-ago period.
Gross debt for Adani Enterprises slipped 0.3% from the preceding quarter to 972.94 billion rupees.
The ports-to-power conglomerate accelerated its growth plans after resolving its legal troubles in the US. In May, the Department of Justice dropped criminal bribery charges against Adani and his nephew, Sagar Adani, after they agreed to pay US$18 million to settle a parallel civil fraud case there. Separately, Adani Enterprises paid US$275 million to resolve a sanctions probe by the Office of Foreign Assets Control. Neither the executives nor the company admitted wrongdoing.
Drawing a line under its US regulatory probes stoked a 43% rally for the stock earlier this year but the shares have tumbled more than 20% from their peak in July, wiping out almost US$10 billion in market value.
The growth prospects for its airport and copper businesses, as well as its joint venture with Jabil for artificial intelligence and data centre equipment manufacturing will stay in focus for investors in the coming months, with consensus expectations for the stock to rally more than 40% in the next 12 months.
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