Adani Enterprises shines on bourses as it closes in on Mumbai airport

Adani Enterprises won the bidding war to operate Thiruvananthapuram, Lucknow, Jaipur, Ahmedabad, Mangaluru and Guwahati airports through the public private partnership (PPP) model
The share price of Adani Enterprises, the flagship company of Adani Group, shot up almost 25 per cent on Tuesday as news reports stated the company was in the final round of talks to acquire a 74 per cent stake in Mumbai International Airport (MIAL)  from the GVK group and other investors. 

The newsflow of an imminent Mumbai airport acquisition not only pushed Adani Enterprises shares up 23.69 per cent, but also drove other group company share prices upwards. 

The company is eyeing to become the leading airport operator in the country by getting access to Mumbai airport and this has driven investors’ sentiment and confidence, said experts. Adani Enterprises already won the bidding war to operate airports in Thiruvananthapuram, Lucknow, Jaipur, Ahmedabad, Mangaluru, and Guwahati through the public-private partnership (PPP) model.  

Adani Enterprises is also planning to add the data centre business to its portfolio and also targeting to become the world's biggest renewable power company by 2030, according to a source close to the development.

"It is not that investors were not aware of the company’s attempts, but it is the newsflow on the imminent acquisition of Mumbai airport which has driven the stock prices," said Deven R Choksey managing director, K R Choksey Investment Managers.


GVK Power and Infrastructure, which is in talks to sell its Mumbai airport business, too, gained 4.68 per cent. Adani Enterprises is eyeing to buy 50.5 per cent of GVK’s stake in MIAL and 23.5 per cent from minority partners. The deal size said to be close to Rs 15,000 crore is large. However, GVK investors are likely to see limited benefits, said Ambreesh Baliga, an independent market expert, as the sale proceeds will go to its lenders.

For Adani Group, it is not only the airport business where the group intends to become the leader. Adani Gas already had won a large number of new gas distribution circles during the last round of city gas distribution (CGD) bidding.  Its plan to develop integrated city gas distribution model, along with auto fuel retailing under the joint venture, Total Adani Fuels Marketing, will also lead to the creation of long-term shareholder value, said analysts. ICICI Securities analysts, who have a positive outlook on the stock from a long-term perspective, said the company is well poised to benefit from India’s growing CGD sector.

Adani Green Energy has been investing in solar, wind, and hybrid projects, and has a total renewable capacity of  4.6 gigawatt (Gw) with 20 Gw development pipeline in resource-rich areas.

The scope for growth now should improve significantly for Adani Enterprises, too. The airport management business is more stable as compared to the airlines business, said Deepak Jasani, head of retail research at HDFC Securities. The company also can grow the business better and Mumbai airport is the best in the class. 

Infrastructure-focused foreign portfolio investors are likely interested in the company, seeing impro­ved growth prospects, and buying by them is leading to significant gains in the stock's price, said Jasani.

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