STOCK Gautam Adani
Gautam Adani, chairman of Adani Group Image Credit: Bloomberg

Shares for Adani Enterprises Ltd. headed to a record high after the flagship firm for billionaire Gautam Adani's conglomerate posted an almost 117 per cent rise in quarterly profit that will give it more firepower to boost its numerous new businesses.

The stock surged as much as 7.2 per cent on Friday to trade at 3,850 rupees ($46.7) per share and was set to overtake the peak it had scaled in September when the company was added to the benchmark gauge Nifty 50. It has jumped 124 per cent so this year.

The Ahmedabad-based company reported a net income of 4.6 billion rupees for the quarter ended Sep. 30, it said in a filing Thursday, compared to 2.12 billion rupees in the same period last year. There were not enough brokerages issuing profit estimates for the company to derive an average forecast.

Revenue almost tripled to 381.8 billion rupees, the filing said, with multiple business divisions - from integrated resources management to mining and airports - surging in performance as the company's push to dominate a slew of industries starts bearing fruit. Total costs ballooned 182 per cent to 377.7 billion rupees in the latest quarter.

Runaway Rallies

Adani Enterprises, known for incubating new businesses for the ports-to-power group that are later spun off, has been at the forefront of the breakneck expansion spree being undertaken by Asia's richest person. The conglomerate has diversified beyond coal-based businesses into green energy, cement, airports, data centers and media, spurring runaway rallies in Adani stocks. Adani Enterprises has surged more than 3,500 per cent in the past five years.

The company "has yet again validated its standing as India's most successful new business incubator as it continues to build on exciting ideas," Chairman Adani said in the post-earnings statement.

Even though some credit watchers have flagged elevated debt at the group as a concern, the conglomerate has allayed those fears saying it has been deleveraging.

The firm's debt-equity ratio has improved to 0.32 in the September quarter compared to 0.66 at the same period last year, according to the filing. Gross debt, as on Sep 30., was 400.2 billion rupees, marginally lower than 410.2 billion rupees at the end of March.

But the net external debt - derived by deducting company founders' debt - has climbed almost 18 per cent to 335.17 billion rupees over the same period, implying growing indebtedness to external creditors. Debt Service Coverage Ratio, which is a marker of a company's comfort in servicing its debt, has worsened slightly from a year-ago quarter.

Earnings were announced after the close of market trading hours in India on Thursday.

Mixed Bag

Other group companies have been a mixed bag in their quarterly earnings.

Earlier in the day, group company Adani Wilmar Ltd., posted a net income of 487.6 million rupees, down from 1.82 billion rupees a year ago while Adani Total Gas Ltd. reported a 1.3 per cent rise in profit.

Adani Ports & Special Economic Zone Ltd., with the highest number of brokerages tracking it among tycoon's other companies, beat average profit and revenue forecast earlier this week. Power utility Adani Transmission Ltd. said Wednesday that its profit fell 25 per cent to 2.06 billion rupees despite a 22 per cent rise in revenue as costs surged.

Two more listed group companies - Adani Green Energy Ltd. and Adani Power Ltd. - are scheduled to report their earnings next week.