A day after Adani Power’s market capitalisation hit Rs 1 trillion, Adani Wilmar, the newest member from the group, joined the club on Tuesday as the shares of the edible oil producer have surged three-and-a-half-fold since its February listing. In the process, the group has overtaken HDFC Group in market capitalisation.
With the addition of a whopping Rs 10 trillion in market cap over the last one year, the combined market capitalisation of Adani Group pole-vaulted to Rs 17.26 trillion, which is Rs 4 trillion more than that of HDFC Group as of Tuesday’s closing, Bloomberg data shows. While Tata Group still holds the Number One slot with Rs 22.87-trillion market cap, Mukesh Ambani group firms come second with an aggregate market valuation of Rs 19.16 trillion.
Moreover, with the latest feat of Adani Wilmar, Adani Group firms dominate the list of top 50 firms by market capitalisation. While all the seven listed firms from the group are now featured on the top 50 list, the Tata group has four companies in the league whereas Bajaj, Aditya Birla and HDFC groups boast of three companies each.
While rising power demand due to soaring temperatures and a post-Covid recovery have propelled power stocks, Indonesia’s ban on palm oil exports has improved prospects for domestic edible oil companies.
According to Prabhudas Lilladher, India, the world’s leading vegetable oil buyer, imported 14-15 MT, of which palm oil’s share stood at 8-9 MT. Palm oil is the relatively cheaper variant among other edible oils. “This move is expected to cause a further price increase in other edible oils such as soya bean oil, sunflower oil etc,” said analysts at the domestic brokerage.
Interestingly, four of the seven Adani group firms hit their life-time highs on Tuesday, with Adani Power and Wilmar hitting their upper circuits during the trade. Additionally, each of them has outdone benchmarks with handsome returns so far in 2022. While shares of Adani Power and Adani Green Energy have more than doubled between January and now, Adani Transmission has gained 63.2%. That compares with Sensex’s fall of 1.5% during the same period.
JP Morgan, which initiated coverage on Adani Wilmar with a “Neutral” rating, observed that the company enjoyed significant sourcing, supply chain and scale advantages over domestic peers to ensure an efficient cost structure that is important for a low-margin business.
“Its growth strategy is premised on scaling up market share in existing categories, diversification into more FMCG segments, the pursuit of strategic acquisitions and an improved margin/return profile over the medium term. We forecast a revenue/EBITDA CAGR of 19%/24% over FY21-24,” said the foreign brokerage in an investor note.
The surge in group firms’ stocks also swelled founder Gautam Adani’s fortune, surpassing legendary investor Warren Buffett to become the world’s fifth-richest person. According to Forbes estimates, the net worth of 59-year-old Gautam Adani soared to $123.7 billion as of Friday’s market close, while Warren Buffett’s net worth stood at $121.7 billion.