Adani Ent 'Too Big To Ignore': U.S. Brokerage Sees 51% Upside For Firm

Adani Enterprises has received a glowing recommendation from a large U.S. brokerage, adding to the growing optimism surrounding the Gautam Adani-led conglomerate as the Hindenburg allegations fade into the backdrop.

What Happened: US-based Cantor Fitzgerald & Co. expressed optimism about the Adani Group’s flagship company, Adani Enterprises, suggesting a potential gain of over 50%.

Analysts at the brokerage initiated coverage on the stock, emphasising that the firm was integral to India’s economic aspirations. In a note, Cantor Fitzgerald & Co. labeled Adani Enterprises as “overweight,” deeming the risk-reward ratio attractive at current levels.

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Setting a price target of ₹4,368, the US-based broker anticipates a 51% upside from Thursday’s closing price. Notably, Cantor Fitzgerald & Co. is the only entity with an active recommendation on the stock, according to Bloomberg’s ratings data.

Why It Matters: Cantor’s recommendation holds weight as it contributes to the positive sentiment surrounding the conglomerate. The group had faced challenges following a critical report by US short seller Hindenburg Research in January last year. Despite this, the combined stock market value of 10 Adani companies has more than doubled.

Adani Enterprises’ current valuation is primarily influenced by its airports, roads, and the new energy segment, the brokerage highlighted. According to analysts, investors effectively receive “six other businesses for free,” which collectively contributed over 85% of revenue in the fiscal year ending March 2023.

Acknowledging the “serious” concerns highlighted by the Hindenburg report, Cantor emphasised that Adani Enterprises has taken measures to mitigate liquidity risk while improving governance and transparency.

Despite challenges, Cantor Fitzgerald & Co. views Adani as “too big to ignore” currently. The Adani Group has consistently refuted allegations of fraud from Hindenburg, which had led to a substantial decline in the group’s market value.

Price Action: Adani Enterprises’ share price was up 6.64% at ₹3,085.60 in afternoon trade. Other Adani stocks were also in the black on Monday.

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