Teji Mandi Explains: Adani Group’s recent acquisitions has a deeper meaning

Adani Group is making acquisitions worth billions of dollars across sectors. What’s the motive behind these buyouts?

Teji MandiUpdated: Wednesday, May 18, 2022, 04:13 PM IST
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What’s Happening?

In the last couple of years, the Gautam Adani-led Adani Group has ventured into various sectors beyond the core business of operating ports, power plants and coal mines into airports, data centres and clean energy. Last year, the group set up two cement subsidiaries - Adani Cement and Adani Cementation in Gujarat’s Dahej and Maharashtra’s Raigarh. Hence, it signed a massive deal with Holcim to acquire the entire stake in Ambuja Cements and ACC Ltd, worth $10.5 billion. It’s one of the largest deals in India and a significant one too.

Adani Ports and SEZ’s subsidiary acquired an entire stake in Ocean Sparkle for around Rs 1,500 crore. Ocean Sparkle has an asset base of 94 owned vessels and 13 third-party-owned vessels valued at an enterprise value of Rs 1,700 crore, with Rs 300 crore of free cash. The list of acquisitions doesn’t end here. There’s more! The group also bought a 49% stake in Quintillion Media for an undisclosed amount. This is an exciting business turn for Adani Group because Reliance Industries mainly owns the media and entertainment industry.

Should This Concern You?

Adani’s careful move into diversified sectors is a move that Reliance did years ago. It will be exciting to see if Adani catches upon its course. It is visible that there is stiff competition between these two conglomerates, and it will only intensify with every passing year. Investors will be at an advantage here as they get to choose the more profitable business.

What Lies Ahead?

What took Reliance 13 years to achieve, Adani Group is almost there in 19 months. Adani’s valuation is just 12% away from that of India’s largest company Reliance Industries. With recent acquisitions, it’s only clear that Adani has officially entered the race and is looking for business expansion across sectors. Will it be profitable for Adani Group? Time will tell.

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