Adani Enterprises Limited (512599) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Adani Enterprises Limited Q1 FY '27 Earnings Conference Call hosted by Emkay Global Financial Services Limited. Please note that this conference is being recorded. I now hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Services. Thank you, and over to you, sir.

Yes. Thanks. Good evening, everyone. On behalf of Emkay Global, I welcome you all to the Q1 FY '27 Post Earnings Conference Call of Adani Enterprises Limited. We have with us the senior management from the company led by Mr. Ravi Singh, Chief Financial Officer, Adani Enterprises; Mr. Arun Bansal, Chief Executive Officer, Adani Airport Holdings; Mr. Rajesh Poddar, Chief Financial Officer, Adani Airport Holdings; Mr. Murali Krishnan, Chief Executive Officer, Adani New Industries Solar Manufacturing; Mr. Manan Bhakaria, Head of Finance, Adani Enterprises; and Mr. Jitendra Khalia, Investor Relations, Adani Enterprises. So today's session would be an update on the results and the outlook by the management, followed by the question-and-answer round. So now I request Mr. Ravi Singh for the opening remarks. Over to you, sir.

Good evening, everyone. Thank you for joining us today for Adani Enterprise earnings call. As you know, AES portfolio comprises primarily of core infrastructure-focused businesses, spanning energy, utilities, transport, logistics and primary industry. For the current quarter, our results are reflecting the discussions that we've had over the last 1 year on value unlock and various interactions over the year. The investments made over the last few years are now progressively moving from build-out phase to value realization phase. Over the next few quarters, there will be a clear pathway visible for accelerated value creation from our diversified portfolio of assets. primarily led by airports and roads. The focus has now shifted from establishing capabilities to maximizing returns, continuing ramp-up in operational performance and increasing overall asset utilization. With the caveat in all of this being that we will continue to report historic CapEx numbers and one of the highest CapEx years of our business this year. We are well on track to achieving that. Moving to quarterly financial performance, all on a consolidated basis. Total income increased to INR 33,546 crores. This was an increase of 50%. This is primarily driven by a reset that is happening in the business as our copper smelter is coming online. Highest quarterly EBITDA at INR 5,642 crores is an increase of 49%, again, reflecting the businesses coming online plus specific price realization. Continuing profit before tax stands at INR 1,295 crores. The establishing business' EBITDA on Raji rising on account of capacity ramp-up of our copper business. A certain project updates. We have signed a new contract in data centers for 400 megawatts, taking our total capacity to -- signed capacity to roughly 1 gigawatt. In the road business, the largest greenfield project of Ganga Expressway has been inaugurated and toll collections have begun in the middle of the quarter gone by. We except the ramp-up to complete over the 6 to 9 months for the road to be operating at full capacity. We've added another BOT Road project of 620-odd lane kilometers, a capital market, and we also like to thank all of you plus investors on this aspect, which is we did the largest QIP of INR 15,000 crores of any nonfinancial corporate. This was about 4x oversubscribed. Again, I take the opportunity to thank you and all investors who participated. This was very well received, and we are pleased to see the continued diversity in our shareholder register. I'm pleased to introduce some of our business CEOs, and we'll continue this trend of progressively bringing our CEOs who run our businesses on the basis of which all these results are possible. Today, we have Arun Bansal, CEO of Adani Airports; and for the first time, Muli, who is CEO of Adani Solar, and they will take you through their respective businesses. First, I hand over the call to Arun, CEO of Adani Airports. Over to you...

Thank you, Robbie. Good evening, everyone, and very welcome to this investor call. Adani Airports is one of India's largest private airport platforms, operating a portfolio of 8 operating airports contributing approximately 23% of India's passenger traffic and 29% of country's air cargo volumes, underpinning our scale and strategic importance in India's aviation ecosystem. Adani Airport current quarter results demonstrate continued growth with resilience despite geopolitical headwinds. The international travel operations at our Navi Mumbai Airport have started from July 15, 2026, and will continue to accelerate during the year. These results were led by tariff revisions at our Mumbai Airport, the start of Navi Mumbai operations and continued momentum in our non-aeronautical revenues. Our non-aero revenues are supported by expansion of non-aero activities across all our airports. If I move to financial and operational performance during Q1 financial year '27, passenger traffic was 24.2 million passengers. Total income was INR 3,763 crores, which was up 39% year-over-year. EBITDA increased by 49% year-over-year to INR 1,633 crores. Aero and non-aero revenue delivered robust year-over-year growth of 16% and 53%, respectively, in Q1 financial year '27. We also operationally added 7 new routes and 1 additional flight during Q1 '27. With that, I hand over to my colleague, Murali.

Thank you, Arun, and good evening, ladies and gentlemen. Adani New Energy Ecosystem is developing an end-to-end integrated ecosystem for manufacturing solar panels and wind equipment. As all of you already know, Adani Solar has featured in the allied list of top 10 global solar panel manufacturers and Adani Pinch became only Indian company in the top 15 global wind turbine manufacturers. I'm happy to inform you that out of our expansion plan of 6 gigawatts, we have commissioned module line of 1.7 gigawatts in the month of June '26. With this, we have now total operational capacity of 5.7 gigawatt of module line and 4 gigawatt of cell line. We are on schedule to commission both module and cell lines to 10 gigawatt by end of this financial year. During this quarter, the domestic module sales have increased 1,340 megawatts, up by 107 percentage year-on-year basis. This demonstrates strong demand of Adani Solar modules in the domestic market, also which has fully absorbed the export intake. Reflecting on the strong domestic demand, we have decided to close advanced authorizations in imports taken are also making payment of applicable duties during the quarter. Moving on to the financials and operational performance of Q1 FY '27. -- module sales to 1,340 megawatts wind turbine sales to 64 sets, which is up by 83 percentage year-on-year. Total income at INR 3,937 crores and EBITDA INR 972 crores. With this, I hand over back to Mr. Robi. Thank you.

Thanks, Murali, and thanks, Arun. I'll quickly take you through the remaining segments. On the Mining Services portfolio, we have 18 mining services agreement with a peak capacity of 145 million tonnes per annum. We are operating at currently at 55 million tonnes, which is approximately 38% of the total contracts we have. More importantly, as we continue to bring on new contracts at operational stage, we will -- we have taken the total available operating capacity in contracts operational to 93 million tonnes, thus giving us a good ramp-up over the next coming 2 to 3 years. During the quarter, dispatch volumes stood at approximately 11.8 million tonnes, revenue at INR 1,174 million and EBITDA at INR 421 crores. In the Integrated Resource Management business portfolio, trading volume stood at 8.3 million tonnes, revenue at 7,000 and EBITDA increased to INR 894 million. This is largely due to price realization and the impact of Giopitolyer. For the first time, we are introducing copper portfolio into our numbers. I will lay out the plan for this. We will have much more detailed presentation on this in our December quarter results, and we will formally do a proper showcase of the copper business post the annual results in March. But as we stand today, our copper sales volume is at 64.7 million tonnes with the capacity utilization now at 52%. Revenue at INR 10,922 crores, giving us an EBITDA of INR 749 crores for the quarter. With this, we are open for Q&A. Thank you.

The first question from the line of Mohit Kumar from ICICI Securities.

Congratulations on successful raise of money to the QIP. My first question is, has there any change in the CapEx plan for FY '27 and FY '28 after this raise of capital?

As I said in my opening comment, absolutely, no, we are committed to the CapEx that we outlined at the start of the year, and we are actually tracking to that number very closely, and we will stick to that guideline.

Understood. My second question is, can you help us with the expected commissioning of, I think, broadly, I think we have now 1 gigawatt of data center. How do you think this ramp-up will happen over the next couple of years?

I think we covered this in our investor deck also, it is on Page #15. So we are expecting the capacity ramp-up to hit about 500 megawatts over the next 3 years. And then because most of the post that, most will be large and then every 2 or 3 years, a large addition will occur. So the first large addition will occur in the next 2 to 3 years will take us from current about 65 to over 470 megawatts operational.

Understood. And I think you're talking about the Noumbai Phase 2. Is it -- are you planning the construction to start in F '27 or you think it is slightly longer term?

I'll let Arun answer that question. Arun, please?

Sorry, can you repeat the question?

My question was in Mumbai Phase 2. Where are we right now? Is it -- will the construction start in F '27 or '28 or it is a longer -- it is something will happen in the long term?

No, the construction will start in this financial year itself. We are in very advanced stage of design work and the excavation work will start as soon as the monsoon is over this year -- this financial year itself.

Understood. My last question, is it possible to share the defense EBITDA in the quarter and the last year? Is it possible?

No. We are not currently going through that. It's not material at the moment, and we will go through that once we have set up the entire ecosystem, and we'll, at appropriate time, showcase that...

We take the next question from the line of Prateek Kumar from Jefferies.

Congrats. My first question is a bit top down. So where do you see your current like large businesses as airport data center is going to be a big business in a few years. Where do you see these businesses going in 5 years' time in terms of size, maybe in case of airport passenger or size of the overall business from the overall company perspective?

I think 5 years is difficult because we don't outline. We have outlined an overall CapEx plan for the portfolio all the way to 2030, 31. We can share that specifically for AEL, which we have done on the roadshow during the QIP. We can note your question and we share that for the benefit of everyone, and we can put it up on the website again. But we are at a point where specifically with the airport, with Arun and team, we are at a point where increasingly, the business is on a stand-alone basis going exceedingly well. And as we have maintained that we will have -- we will come to a decision point in relation to rewarding the shareholder of AEL with somewhere around 2028 in terms of this business being demerged. And -- but other than that, directly to your question, we will actually point you to the AEL's offering circular and roadshow presentation. But we take your question on note and the team will update and upload the question so that it's available to everyone.

Sure. Certain bookkeeping questions. What drove the interest expense sharply during this quarter sequentially?

E capitalization of large assets, Ganga Expressway...But no specific large-scale change has occurred. If you see the data, I'll point you to the page on our -- in our presentation. If you go to Page #25 of the presentation, it will give you the full detail of the current debt stack of the business and the ratios attached to that. So there's no material significant change that has occurred in any one. unless I'm missing your question, and you have some follow-up question detail on this that I'm not able to ascertain from your question.

My question was like particularly because you commercialized Naviumbai like prior quarter. Copper was already commercialized. I also thought that was also like partly commercial earlier. INR 700 crores on a Q-on-Q basis, there is a swing. So that was my question. Also, like now are you looking at like upwards of INR 9,000 crore interest expense for the year?

That's largely because the assets are capitalizing. So the interest payment is coming on to our books. But that is a change of the -- on a consolidated basis, the INR 1,905 crores becoming INR 2,004 crores, that's directly linked to the asset capitalization.

Sure. There are a couple of other questions on your mining services performance was a bit muted and in terms of volumes, while trading IRM business EBITDA was very strong. So how are you looking in terms of volumes in these 2 businesses '27?

Mining Services will continue as it is. Like I said, we are currently at about 40 -- just on 159 million tonnes dispatch. We expect that the -- with the new mine coming online, we expect somewhere between the range of 16% to 20% growth in the mining services in relation to simply because on new contract is now operational. And in the RM, I would -- we like to caution a little bit in the sense that it's more important to look of the volume. The volume is consistent. The swing that has occurred is largely due to the geopolitics and that can sustain for a period of time, but that's the volatility induced increase.

[Operator Instructions] We take the next question from the line of Irish from MS.

Yes. I had my first question was on airports. So congrats on a strong and for growth by, I understand even strip off that the organic portfolio has done well. If you can highlight some of the key strategies that you guys are focusing on? I understand the digital app is a key part of that strategy. Should we look at similar growth rates continuing for the fear or how we should -- that's my first question. .

Look like the non-aero growth to a very large extent, is driven by our IP and also the ATV per passenger, not so much but [indiscernible] being up as the Internet flight only started post the by July. But we see growth across matter verticals duty CFM bees and rented we also started 1 new line of business which has started to be meaningful in the financials in terms of ground and from this year and which will be recurring for us.

And should -- how should we think about the annual number? Like any estimate on how the growth could be for the balance part of the year? Particularly non-aero?

So non-aero, I mean, of course, it depends on the current geopolitical issue where they could hamper the passenger growth significantly, especially the international passenger, so if the growth comes back in the international procedure to a plant, you should see the similar growth continuing during the year.

Secondly, just on the Roads portfolio. I don't see the EBITDA, maybe I've missed it. If you can quantify what's been the EBITDA for the quarter, given that ganaxpress has also started?

The loans EBITDA is -- and we expect it to continue to ramp up because Ganga was nowhere near close to its cash at the moment. It's ramping up, if we expect the ramp-up to continue and stabilize over the next 9 months on [indiscernible]

And my last question is on copper. So very strong and sharp improvement. Any one-offs here or should we expect this run rate of, let's say, between INR 750 crores to INR 800 crores per quarter going into the balance 3 quarters of the year as well?

I think I would just like to -- whilst we are very happy with the results. But I think as you understand in the -- it's basically a specific business in relation to this process. So we expect the that the EBITDA margin on sales, which currently -- this year -- this quarter has been about 7%. Long run, we expect that to be about closer to the 5% range. And but we are currently at 52% utilization. So you expect the utilization to hedge towards 75%. And consequently, with that kind of utilization increase, with the stable quarter-on-quarter EBITDA, yes, we expect that to remain in this 800 range. But as the capacity ramps up, the mathematically, the EBITDA will go up. But please be mindful that currently on 10,900 crores. Our EBITDA is INR 749, which is roughly 7% but in the longer run, we'd expect that number to be about 5%, although the revenue number will be lifting significantly from here as the lines and the ramp-up matures.

We take the next question from the line of Manish Somaiya from Kantar. I would discuss and then speak.

My apologies. I always have this issue with my phone. Maybe a question for Arun. Obviously, the airport business is growing nicely, very impressive business overall. Is that a milestone that we should be thinking about in terms of breakeven or earnings before taxes type metric obviously, we see EBITDA moving much, much higher, obviously, at the depreciation associated with the growth, the start-up costs, et cetera. But how should we think about profit before taxes on a breakeven basis for that business?

I'll take that is largely in terms of the technical finance part. And obviously, on the business side, Arun can comment. Arun, please to comment when -- but just on the Minishathe way we look at the structure of the Apobusiness is that it's a RAB-based business. So the more important thing is what is our RAB regulatory asset base changes and what is the RAB income that will occur the increasing regularly asset base. [indiscernible] current INR 37-odd CR to close to INR 70,000 CRs. . App grew the regulatory return -- the metrics that we will introduce that as we go through over the next 18 months, which are like the gross spend rate of the consumer. We report that number, I mentioned his opening comment as well. gross spend rate of people visiting an airport, and we will continue to, as Arun also indicated that we to the new business segment. So we continue to add and provide clarity on that aspect. On the P&L side, that is your question in relation to P&L side, we will still remain a heavy depreciation business because we are adding so much asset base. So the -- we will start reporting over the next 12 months, cash earnings on the asset base. And consequently, you'll be able to track a number called cash per share of the business. And we'll provide that visibility to the market on that. But for the foreseeable future, just given the rapid rollout of the asset base, we will still remain a heavy depreciation business in relation to post depreciation and PAT number growth and the conversion of that. But on the cash flow conversion to cash per share, we will be we'll bring that out over the next 12 months in much more clear manner. Arun, would you wish to add anything on the business side, if I list [indiscernible]

No. Rob, you covered it very well on the business side. I think the biggest milestone for us in the next 3 quarters is to get Naimumbaiat operating per quarter of 20 million passengers. So that's where our immediate focus is.

Okay. I did want to touch on Gung Expressway as well. I was hoping to see more of a profit boost as far as Q1. And also surprised to see revenue is at least weaker than what we would have expected even vis-a-vis year-over-year. So I'm just trying to find a path to how we can see an improvement going forward. Are we being too optimistic on our side versus what's happening on the ground? Maybe if you can kind of reconcile that for us, that would be helpful.

No. Actually, no, we are not in we're certainly not being optimistic. I can tell you that much. And we are being very cautious in what we are saying. And the reason is that -- when an asset of that scale, which is actually a trunk asset is coming online in a major state in India, which is UP. The procedures that they have to go through to food. So they actually -- the toll collection only began on 15th of May. So then we -- that's why, as I said in my opening comments, we expect this to be a massively successful toll road. Just based on the initial indication, we have ground indications. So I was there actually in Lignos well myself. So we've gone through this -- we are extremely confident that this will be a massively valuable asset, not just for us, but actually for the state economic architecture also. This is a trunk road. I would compare this to what the across Malaria, high midcorMalaysia. This is going to do that for UB [indiscernible] critical infrastructure operation. When you're on the ground, do you actually see -- already start seeing impact of this. You're certainly going to get a massive uplift in MSME manufacturing clusters around the defense ecosystem in this area. -- largely driven by now the connectivity of this road. So we are extremely confident. We -- if you wish to have specific answers that we believe we are not -- or you think we should clarify more. We are happy to take advisement and we will try to make sure that at least in the next results, we lay it out in more detail, so it clarifies. If any suggestion is there, please do so, being happy to clarify. But we are extremely positive about the business overall. And based on the ground reality that we are going to -- there would be an upside surprise other than anything else.

No, I think the clarity you offered is helpful. I didn't realize that the toll collection only began May 15. I had the fourth quarter in my estimates. So maybe where it is off. And of course, I've seen pictures of the highway and it's super impressive. Congratulations to the team doing that. It's just absolutely fabulous hopefully, it works out the way you anticipate. On the data center side?

It's even better than 6 years on -- it's actually in the contrast is even more stock when you are there because you see surrounding and then you see this highway. You certainly think you are in first world country when you're on the highway. Obviously, within a second, you back in developing country. But nevertheless, once on the highway you feel like you're in the first world country.

Right. No, I mean the pictures have been amazing. Just 1 last question on the data center. I think -- you talked about the 960 megawatts of tighter capacity. But I guess, only a small portion is operational. So how should we think about the per megawatt or customer funding or prepayments when it comes to developing that.

I think just on the -- on the CapEx side of the data center, we will specifically come back to you, if you don't mind, on the question, but we do that we are -- if you are to give you a per megawatt, today, I can give you the range, but we can obviously clarify that in more precise detail because we do have the information. So we are roughly around, say, about INR 70 to INR 75 crore per megawatt -- and a run rate return, which is U.S. dollar equivalent of approximately 12%. And the ramp-up structure now that hyper now the ramp up, the construction is not moving to the hyperscaler format. So the next construction period will add bigger chunks to the business. So you're just going through -- currently is going through the sort of 5000-megawatt type additions, but we'll move to a few 0 megawatts of additions at each construction cycle, which is roughly 2.5 years. So in the next 3 years, we expect to add, we take this capacity closer to 500. So 5x what it is today, more than 5x, about 7 to 8x what it is operationally today.

We will take the next question from the line of Aditi from Courtis.

Congratulations on a strong set of results. I have 2 questions from my side, the first 1 on airports. We've been possibly surprised with you doing much better nonrepeat for this quarter at INR 880 also. I wanted to say whether there is more headroom available to go beyond that 18 which is meaningfully higher than the [indiscernible]

Arun, please.

So I will take this. So as I explained, 1 part of the growth this quarter was ground handling business, which we only started last year post Q2. The second part is, yes, there is still a lot of headroom left for growth in non-aero with 3 different initiatives. One is, as I said before, the digital initiative we have started to engage with passenger much before they have come to the airport. Second is engaging with the non-passenger with meters and retails, which is 2, 2.5x the passenger. And the third is the city side development, which we have started to do and will go live from financial year 2030. Then within the non-aero business inside the terminal also, we are doing a lot of premiumization with the GDP growth and the aspiration of India. So we believe there is a headroom to increase the ATV for us for transacting passengers inside the airport by giving them better offering. So we are upgrading long experience. We are upgrading F&B experience. We are upgrading retail experience to meet the aspiration of young India.

The question. The big update that has happened in lease and rental, is it linked to more retail space getting deployed at your efforts? Or is it in maybe to do with higher foils happening? .