Techno Funda

26 April 2011

HORIZON: 1-30 Days

Adani Enterprises Ltd.

Price (Rs.) Market Cap (Rs.Crs.) 52 High / Low (Rs.) Mcap/Sales Book Value (Rs.) conso BSE NSE Ket Financials Consolidated (Rs Crores) Gross Sales PBIDT Interest Depreciation Net Profit EPS (Rs) CEPS (Rs.) F.V. (Rs) Dividend (%) Equity Capital PE (x) Latest Quarterly results (Rs Crores) Gross Sales PBIDT Net Profit Equity EPS Shareholding Pattern (%) Foreign Institutions Corp. Holding Promoters Public&Others 631 73201 785.25/505 14.64 98.53 512599 ADANIENT

CMP:631
Investment Rationale

SL: 600

TGT: 690

Adani Enterprises Ltd (AEL), the flagship company of leading infrastructure conglomerate Adani Group. The company has a diversified presence in five business sectors: Power, Oil & Gas, Real Estate, Agro and Metals & Minerals with Shipping, the shipping acting as backbone to its various businesses. The company operates through 30 offices including eight overseas offices in USA, UAE, China, Singapore, Indonesia, Mauritius and Myanmar. PT Adani Global, Indonesia a subsidiary of the Company, has been awarded coal mining concessions in Bunyu island, Indonesia from which coal will be used for the power projects being developed by Adani Power Ltd. The Company, in a consortium with Naftogaz India Private Limited, Adani Infrastructure Services Private Limited ('Adani Infrastructure') and Welspun group have been awarded 2 Oil and Gas blocks under NELP VI (Assam Block & Palej Block) . The Company and Adani Infrastructure hold 35% & 20% participating interest in each of the aforesaid two blocks and is a non-operator. Adani Enterprise has firmed up its business plans in Japan by announcing a long term tie up and signing a partnership agreement with Kowa Company, Japan's leading diversified business group entailing joint venture in common areas of business like infrastructure and trade such as exports in both Japan and India. It remains one of the most highly leveraged, despite its Debt to Total Capital ratio shrinking to 68.85% over the last fiscal year. However, an examination of near-term assets and liabilities shows that there are enough liquid assets to satisfy current obligations. Accounts Receivable are typical for the industry, with 45.30 days worth of sales outstanding. Last, inventory levels, relative to its Cost of Goods Sold, are typical for the industry and have shown a consistent decrease during the last 4 years. This implies that management is becoming more efficient.

FY09

FY10

% chg -1.18 79.62 73.15 84.30 82.17 % chg -11.48 88.65 56.12 chg 0.25 -0.12 -0.03 0.00 -0.10

26181.81 25873.89 1014.92 1822.96 348.82 603.98 82.18 151.46 504.65 919.3 20.46 18.55 23.80 21.50 1 1 100 0 24.66 49.8 30.83 34.02 Dec-09 6371.75 539.26 303.88 49.6 6.13 Dec-10 17.4 1.15 1.52 78.32 1.62 Dec-10 5640.2 1017.34 474.41 109.98 4.31 Jan-11 17.65 1.03 1.49 78.32 1.52

Risks Environmental issuance problem along with stretched balance sheet poses a concern for the company.

Technical Comments
Stock is trading in an upward channel and likely to take strong support around 625 levels being 50 Days EMA. The stock looks good with increasing delivery volumes and may see positive momentum in coming days. One can initiate long positions with stop of 600 levels and target of 690 levels.

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Research

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