Adani Enterprises Ltd. Q4 FY23 Earnings Conference Call Insights

Key highlights from Adani Enterprises Ltd. (ADANIENT) Q4 FY23 Earnings Concall

Management Update:

• [00:03:21] ADANIENT said that for the first time EBITDA of incubating businesses grew by 375% to INR 5,043 crores, higher than the operating business EBITDA of INR 4,982 crores, which grew at 36%.

Q&A Highlights:

• [00:09:22] Nikhil Abhyankar from ICICI Securities asked about the capex plans for FY24. Robbie Singh, Group CFO said the total capex for next year at exchange rate of INR80 is about $3.8 billion. This includes $2.1 billion for transportation; airport and road, $800 million for data centers and utilities, and $1 billion for materials.

• [00:10:54] Nikhil Abhyankar of ICICI Securities enquired about green hydrogen plant’s update. Robbie Singh, Group CFO replied that Green hydrogen plant projects are ongoing with expected ramp-up of capex starting in financial year ’25 and ’26. The focus is currently on committed capex for the next 12 months due to a market decision. Ramp-ups will increase slightly towards 2030. Plans are continuing in the core, infra, energy and utility sectors.

• [00:11:57] Nikhil Abhyankar of ICICI Securities queried if sales will double in the coming year with the 3.5 gigawatt solar manufacturing capacity and what kind of margins are expected. Robbie Singh, Group CFO answered that the goal is to complete an integrated program for producing low-cost hydrogen. The Integrated Manufacturing division plans to sell to third parties at a 20-25% margin, but the larger objective is to control input costs by finishing the integrated facility.

• [00:14:21] Nikhil Abhyankar of ICICI Securities asked about the production targets for domestic mining operations and Carmichael and the revenue and EBITDA for Carmichael in 4Q23. Robbie Singh, Group CFO said 4Q23 EBITDA for Carmichael was INR780 crores and revenue was INR 1,746 crores. Domestic mining target for next year is 40 million tonnes and 12 million tonnes for Carmichael. However, there are challenges to be faced in achieving these numbers.

• [00:17:01] Apoorva Bahadur from Goldman Sachs asked why ADANIENT not participate in the second phase of PLI for integrated module manufacturing when the plan was to extend it until 10 gigawatts. Robbie Singh, Group CFO said the company is comfortable with the current plan for the integrated facility and has sufficient capacity planning for integrated solar lines and wind turbine facility. Participation depends on the business case.

• [00:25:02] Nirav Shah from GeeCee Investments asked about the debt levels this year and the expected repayment schedule. Robbie Singh, Group CFO clarified that the net debt number has not changed between this year and last year. The net debt to EBITDA is 2.2x.

• [00:29:01] Rohit Natarajan with Antique Stock asked about the guidance of IRM for FY24. Robbie Singh, Group CFO said the company expanded across the country, prices have corrected, but volumes won’t drastically decrease. Market share will be higher than last year, but future numbers depend on imports in the next financial years.

• [00:31:53] Rohit Natarajan at Antique Stock qaueried about the expected coal grade, stripping ratio, and EBITDA for the new commercial mines that were won recently. Robbie Singh, Group CFO said the commercial mine is a combination of underground and open cast mines with a declared capacity of 5 million tonnes. At least 5 unexplored blocks require exploration and finalization of agreements for mining peak capacity. It is too early to provide a reasonable number on peak capacity and contribution.

• [00:33:36] Rohit Natarajan of Antique Stock asked about the roadmap for increasing the portfolio from 5,000 to 12,000 kilometers by 2026. Robbie Singh, Group CFO replied that the company has a projected number based on its current best estimate of bidding and other opportunities in the country.

• [00:37:46] Prateek Kumar from Jefferies asked about the updates on new airport additions and the recent privatization of airports. Robbie Singh, Group CFO  said the company has a network plan and are targeting airports. ADANIENT has only heard that aero privatization will continue and there may be timing changes.