Adani Enterprises Limited (512599) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Adani Enterprises Q2 FY '27 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Mr. Alok Deora. Thank you, and over to you.

Thank you. Good evening, everyone. On behalf of Motilal Oswal, I welcome you all to the 2Q FY '27 Earnings Call of Adani Enterprises. So we have with us the senior management from the company led by Mr. Arun Bansal, Chief Executive Officer, Adani Airport Holdings; Mr. Muralee Krishnan, Chief Executive Officer, Adani New Industries Solar Manufacturing; Mr. Rajesh Poddar, CFO, Adani Airport Holdings; Mr. Manan Vakharia, Head of Finance, Adani Enterprises; and Mr. Jitendra Khyalia, Investor Relations at Adani Enterprises. So I would now hand over the call to Mr. Arun Bansal to provide opening remarks, and then we can take up the Q&A. Thank you, and over to you, sir.

Thanks, Alok. Good evening, everyone. Thank you for joining us today for Adani Enterprises earnings call for the quarter and half year ended September 30, 2026. AEL's portfolio comprises primarily of infrastructure-focused businesses, which spans across energy and utilities, transport and logistics and primary industry. It is my pleasure to inform you that AEL achieved credit rating upgrade to AA Stable by CARE during the first week of October 2026. Its highest ever long-term rating in its credit history. This upgrade serves as an independent validation of AEL's disciplined capital management and tight fiscal prudence. As we informed in our earlier discussions, AEL's current fiscal results will reflect value unlock from investments made over the last few years and moving progressively from build-out phase to value realization phase. AEL has reported its highest ever half yearly EBITDA of INR 11,958 crores. The strong EBITDA delivered is testimony of incubation business model and the strength of our diversified business platform, backed by strong operating fundamentals, increasing asset maturity and the ramp-up of newly commissioned Adani New Industries module line capabilities. AEL is now well positioned to sustain this growth trajectory going forward. Moving to our half yearly financial performance. On a consolidated basis, total income increased to INR 71,569 crores, an increase of 62% year-over-year. EBITDA increased to INR 11,958 crores, an increase of 56% year-over-year. Continuing profit before tax increased to INR 3,297 crores, an increase of 45% year-over-year. Adani Airport Holding Limited EBITDA reported growth of 52% year-over-year to INR 3,275 crores. And KCL Copper EBITDA reported EBITDA of INR 2,033 crores. Now let me move to business-wise update. Our data center business. Adani Connex has signed up a new hyperscale contract of 240-megawatt capacity, taking cumulative contracted capacity to 1.2-plus gigawatt. During the quarter, we handed over additional 29.2 megawatt data center to customers, taking operational capacity to 94.6 megawatts. Moving to airport business. Adani Airport is one of India's largest private airport platforms, operating a portfolio of 8 airports, including the greenfield Navi Mumbai International Airport and contributing approximately 23% of India's passenger traffic and 29% of country's air cargo volume, underscoring our scale and strategic importance in India's aviation ecosystem. Adani Airports delivered a resilient performance during first half of this fiscal and achieved highest ever half yearly EBITDA of INR 3,275 crores, which is close to full year EBITDA of financial year '25. This growth is achieved despite industry headwinds like elevated fuel prices and airspace disturbances, which have weighed negatively on passenger traffic. The effort put in over the last few years in developing non-aero strategy and ecosystem have provided resilience in this atmosphere. Our greenfield development of Navi Mumbai International Airport commenced its international operations effective 15th July '26. Indian domestic airlines, IndiGo, Air India and Akasa recently announced their operational plans to commence international operations and progressively expand from Navi Mumbai Airport. Moving on to financial and operational bank performance during Q2 financial year '27. We handled passenger traffic of 21.3 million passengers, total income of INR 3,786 crores, up by 20% year-over-year. EBITDA of INR 1,641 crores, up by 55% year-over-year, and aero and non-aero revenue delivered year-over-year growth of 9% and 57%, respectively. During the quarter, we added 8 new routes and 4 new airlines. If I move to Mining Services portfolio, during the quarter, we dispatched volume up -- stood at 10.7 million metric tons, while revenue stand at INR 998 crores and EBITDA of INR 407 crores. In Integrated Resource Management business portfolio, during the quarter, trading volume stood at 7.4 million metric tons and revenue stood at INR 7,169 crores and EBITDA of INR 654 crores. In copper business, we are now seeing capacity ramp-up. During the quarter, copper sales volume of 80.6 kilotonnes with capacity utilization increased to 64% Revenue increased to INR 14,843 crores and EBITDA increased to INR 1,283 crores. With this, now I hand over the call to my colleague, Muralee Krishnan, CEO of Adani Solar. Over to you, Muralee.

Thank you, Arun. Good evening, ladies and gentlemen. Adani New Energy Ecosystem is developing an end-to-end integrated ecosystem for manufacturing solar modules and wind equipments. As all of you know, Adani Solar has featured in the Alight list of top 10 global solar module manufacturing and Adani Wind became the only Indian company in top 15 global wind turbine manufacturers. I'm happy to inform you that we have commissioned the remaining module line capacity of 4.3 gigawatts on 31st of August 2026, completing our expansion to 10 gigawatt module line capacity. We are on schedule to commission the solar cell line of 6 gigawatt by end of this financial year. During the quarter, domestic module sales have increased to 1,478 megawatts, up by 35 percentage year-on-year basis. This demonstrates strong demand of Adani solar modules in domestic market, which has fully absorbed the export intake. Now moving into the financials and operational performance of Q2 FY '27. The module sales was 1,478 megawatts, up by 35 percentage year-on-year. Wind turbine sales was to 35 sets, up by 25 percentage year-on-year. Total income stood at INR 3,669 crores with an EBITDA at INR 1,094 crores. Now the session is open for question and answers.

[Operator Instructions] We have the first question from the line of Manish Somaiya from Cantor.

Can you hear me?

Yes, we can hear you, Manish.

Okay. Wonderful. I wanted to ask my first question on the airport business, specifically on Navi Mumbai, perhaps if Arun can talk about the key traffic yield and cost milestones over the next 12, 15 months that we should be thinking about as that airport ramps up? And what are sort of some of the meaningful contributions to profitability and cash flow that we should think about?

No, thanks for your question. So NVL, as I said in my commentary, we started the commercial international operations from 26th of July. As you might have seen recently, together with Indian carriers, IndiGo, Akasa and Air India, we have announced the new international routes. Actually, IndiGo has announced 12 new routes from Navi Mumbai, starting from December up to April, summer scheduled '27. Air India Group has announced 7 international routes from Navi Mumbai and Akasa has announced additional. So that makes 19 international routes is existing from Navi Mumbai. Domestic also, we see a proportionate growth. So our guidance is that we will exit next financial year with full capacity at Navi Mumbai. So Navi Mumbai, as you know, the capacity we can handle is max 20 million, which is 5 million international and 15 million domestic. And we will exit next financial year, i.e., Q1 2028 running with a run rate of $5 million per quarter.

Okay. That's helpful. And then on data centers, it's obviously great to see the tie-up with a new hyperscaler. The capacity is now 1.2 gigawatts plus. If you guys can help us understand how we should think about the commissioning schedule and what level of equity and CapEx we should be kind of baking in as we think about that?

Manan, over to you.

Yes. So in terms of data center, we will stick to what we discussed in terms of our earnings call discussion during Q1 where we are expecting in the range of 120 to 150 megawatt of operational capacity as a capacity of when we exit FY '27, the current fiscal. And over the next 12 to 18 months, we will significantly ramp up all the remaining projects, and we should be expecting close to 500 megawatt of operational capacity, which will be -- which we will start billing to the customers. In terms of the CapEx and equity requirement is something where we expect this project to be funded at approximately 20-80 to 30-70 kind of scenario. And we will have the same CapEx numbers as generally are there for any other players because we are primarily in the core and Shell MEP and all the structure and we are not a full player where we install our servers also because that is in the scope of customers.

Okay. And then just lastly on roads for me. Now that Ganga Expressway is operational, how should we think about the recurring toll and annuity income becoming sort of the dominant force when it comes to earnings because that's something that I think we have yet to see. So I'm hoping you can help us with some of the key milestones we should be watching for over the next few quarters.

So I think we have -- starting last quarter, we have fairly entered into an area where the numbers in the P&L or the reported numbers reflect the annuity income as well as ongoing toll income. What we should expect going forward is the increase or the optimum utilization of the roads where the toll covers are to be generated. So as the traffic grows and as the traffic picks up across the lines of newly commissioned toll roads, including Gaga Expressway, you will see those ramp-up number coming in. But when you compare year-on-year because of how the IndAS accounting works for the service concession accounting, you will see some kind of variability in the revenue numbers. I understood pretty much that is your question. Otherwise, you will see the normalization has already happened, and you will see this continue for a few quarters in the next period. But as the construction starts for the new projects, you will see that again being reflected in the P&L.

We have the next question from the line of Mohit Kumar from ICICI Securities.

My first question is on the Bangalore tunnel project, I think the L1. Is there any update on that project if you can share?

No. So it is at the same level. So that is what we know from the authorities that we are L1. There is no further development there as of.

Understood. Coming back one suggestion for the road EBITDA. Of course, we understand that we are doing AST accounting. Is it possible to share the operational EBITDA going forward given that the -- of course, for the -- our last 3 projects have got operational for Ganja Expressway. Is it possible to share the operational EBITDA going forward in the PPT, that will be helpful for us.

Sure, Mohit, you can include this, but for your reference and for the benefit of everybody, we will share the numbers over the call as well. So our EBITDA for roads business for Q2 is INR 354 crores and Q1 was INR 288 crores. So that takes us to a half yearly number of around INR 642 crores of EBITDA for roads.

Understood. Coming back to the airport business, I think we are expecting to commence the work on Phase 2 of Navi Mumbai. Is there any -- can you just update us on that, given that the -- of course, the traffic is below par, are we postponing that CapEx? And the second question on the airport business is last year, if you look at the non-aero business, I think we took over the ground handling, I think somewhere in Q1 FY '26, right? And that particular revenue is not present in the base quarter, while you see that number is present in the Q1 and Q2 FY '27. Can you help us understand that line item?

I'll take the first question, Arun here, and then Rajesh will help you with the second question on exact number. So Phase 2 of Navi Mumbai has already kicked off. We have already onboarded the international consultant and the design work is ongoing. We are also in the process of finalizing the GC contractor, which will be onboarded within very, very soon. So Phase 2 of Terminal 2 of Navi Mumbai, the actual work will start within the month of November this year.

Understood. And on the ground handling, sir?

Yes. So in case of ground handling, Rajesh. So in case of ground handling, we had commenced operations at Mumbai, Ahmedabad, Navi Mumbai through 100% subsidiary, AGH Port. And during this particular H1, we have earned a revenue of around INR 339 crores for the 6 months period.

So this was not present last fiscal completely. Is it right?

Yes, it was not part of...

So Mohit, the entity was acquired and in-sourced somewhere in the middle of November. So it actually was present for approximately 3 or 4 months in the last financial year. So yes, if you look at the half year number, it was not materially there.

Understood. Understood. Now my question on the solar and wind. Sir, on this particular quarter, do you have any idea how much is sold in the rooftop? And are you thinking about setting up ingot and wafer now?

So there are 2 questions. One is that on the rooftop, actually 56% of our sale was into the rooftop. And in terms of ingot wafer, I would say that we already have 2.2 gigawatt of ingot wafer capacity and the balance capacity will come up by 2028, which we are already working on. The engineering work has already started. So that will well align with the ALM policy.

So you commenced work on the balance 8 gigawatt of ingot wafer. Is that understanding correct, sir?

Yes, it will be actually a bit more than 6 gigawatts because in the -- if you look at technically, the yield factor is approximately around 87 to 88 percentage to the nameplate capacity world over. So accordingly, the capacity installed will be slightly higher than the cell capacity what we have already in hand.

Understood. So is it possible to share the solar order book and the wind order book at the end of Q2?

So in general, I can only say that our capacity is already booked for it, both for wind as well as solar. We will not be in a position to give you the exact number at this point in time, but I can assure you that the order book is already full.

Understood, sir. Last question, sir, how much was CapEx done in H1? And is it possible to give us the broad breakup of the CapEx segment-wise?

Mohit, what we have done is we have included staged FAQs as a part of our earnings presentation, where we have included a full breakup in the appendix for the CapEx.

Sure, sure. Understood. And sir, one more question, if I may ask. In your PPT for data center, I think there was the contract reservation, right, which was 1.2 gigawatt. I think this was shared, I think, by end of F '26. Do we have similar number for by end of Q2 FY '27?

Sorry, come again?

In an investor PPT, which was shared earlier, there was a data center capacity of 1.2 gigawatts, which was under contract reservation. Can you help us understand the definition of contract reservation? And what is that number at the end of Q2 FY '27?

So see, what you can refer our data center slide, what we have included as a part of our presentation. So we are constructing data centers of 1.4 gigawatt capacity.

Correct.

Those are at various stages. Out of this, the capacity of 1.2 gigawatt is already tied up and is at a different level of implementation and the project construction. And the remaining capacity is open, which can be taken up by everybody.

Maybe I'll take it offline.

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

Congrats for a great set of results. My first question is on Airport business. Can you discuss progress on real estate CapEx and any specific milestone you are looking at by end of FY '27, FY '28 for Citywide development?

Yes. So Citywide development, we have signed the contract, the HMA for all the hotels we are building basically with our partners. The work is ongoing at 5 assets, Mumbai, Navi Mumbai, Ahmedabad, Jaipur -- sorry, Lucknow and Guwahati. And the work at Jaipur will start very, very soon. The Phase 1, as I call it, we will be live at Ahmedabad by October 29 at Mumbai and Navi Mumbai by March 2030. Then we are undertaking some major CapEx project on aeronautical side. As I said before, we are building a completely new terminal, Terminal 2 at Navi Mumbai. We are doing a redevelopment of Terminal 1 at Meal, which will start from Q1 next year. We are building a completely new integrated terminal at Ahmedabad in line with the Commonwealth Games, which Ahmedabad City will host in October 2030. So that terminal will be ready. And we are doing some minor additions of capacity at Terminal 2 in Mal, building additional capacity at Trivandrum and a new terminal at Jaipur. So there are a lot of CapEx -- heavy CapEx items, which are work in progress from now until 2029, 2030.

Sure. In the data center business, can you discuss the recent joint venture with Jabil Adani Jabil partnership? What is the scope of the business? And what is the -- is this a new CapEx which the company is envisaging? And other question on data center is like we do read about a lot of position for data center setup like particularly in Vizag and Navi Mumbai and where we are like looking to set up large projects. Can you discuss status of land acquisition or whatever is required for these projects, which just suggests that our projects are on time and we are looking at 2 gigawatt capacity by probably FY '30?

Prateek, so you have 2 parts in your data center question. So I'll take first about Jabil. So yes, so the present joint venture, which is with EdgeConnex is completely a data center play in terms of it operates in building and constructing the data centers, core NL, ABP solutions and other related stuff, which you know about this. And what goes inside the data center is generally within the scope of customers. Now what we seek to do with Jabil is that it's a completely new development, different and separate from AdaniConneX, where Adani Enterprise and Jabil are looking to manufacture the AI racks and the data servers and related equipment. And the manufacturing facility set up -- will be set up in the country. So it is still at an MOU stage, and we are looking to finalize the definitive agreement over a few months. And once we have those signed, we will come up with the proper disclosure in line with the regulatory requirement, and we'll have the details included in our CapEx and other segments. So that was part of your question. On part 2, yes, the various data center locations, which we have defined in our earnings presentation, we have access to majority of those lands and are already acquired and are in the very advanced stage of completing the acquisition. So we are very confident that these projects will be completed as planned and as envisaged.

And just to confirm, you said operational capacity moves from current 95 to 125 '27 and 500 by FY '28. Is that the number you said?

500 over the next year, 18 months, yes. So practically, yes.

Sure. On Road segment, the performance or progress or the ramp-up at the new project seems a bit slow. Is that underwhelming versus company's own estimates? And how do you see like kind of progressing on a quarterly basis?

I think it is progressing well, but they are slightly off the mark where we would otherwise like those numbers to be in terms of the capacity ramp-up at the toll projects. But this is practically Q2 being a seasonally rainy season plus the heavy floods and the situation in the north part of the country. So we will discount that. But as we speak today, we are seeing a good progress at the increase towards what we are expecting the number to be. So yes, it's slightly off the mark currently. But yes, we will catch up in the next 2 quarters.

Last 2 questions. Firstly, on Anil, we have commissioned new capacity of module. What is the run rate of volumes with the significant increase in capacity which we have now over the next 2 quarters?

Yes, we are expecting about 2 gigawatts for the next quarter. And that will be the run rate that we should be going with the new capacity coming in.

And what is the mix of volumes [Audio Gap]

[Audio Gap] Number one, we are heavily investing in digitization. So we are working with Adani One app, which we have revamped to focus only on airports. And hence, we are able to increase the penetration year-over-year. This quarter, we had almost 25% of our non-aero transactions happened over digital. As a result of that, we are able to increase the average transaction value per passenger. We are able to increase the penetration. And the third thing is we are able to premiumize most of our shops. We have brought in new lounges on board. And of course, Navi Mumbai initial ramp-up also helped because Navi Mumbai, there was no non-aero revenue last year. So combination of all those has helped and partly also the ground handling services as one of the colleagues asked, there was no ground handling last year, which got incorporated this year. So multiple factors contributed to a strong non-aero growth.

Now...

Mr. Biplab, if you could come kindly closer to the microphone as we are unable to hear you very clearly.

Is it okay now?

This is much better, yes.

Okay. Okay. So my second question is on the CapEx commitment. You have quite significant CapEx expected in airports, in data centers, I think even in defense. So could you give us some kind of color on the CapEx commitment over the next 3 to 5 years? And which business segment will have significant CapEx? That's my second question.

So we have given the CapEx, which is already incurred as a part of our standard details in the presentation itself. In terms of the outlook, we will stick to what we outlined in our earnings call during Q1. So we expect to do the CapEx at a run rate of around INR 40,000 crores. So we may be somewhere in the INR 35,000 crores to INR 40,000 crores which is the rate we expect to continue over the next couple of years. INR 350 crores to INR 400 crores. And the heavy lifting will be done obviously by airports.