Gautam Adani-controlled Adani Enterprises Ltd. returned to profit in the second quarter as newer businesses, including airports and data centers, scaled up. Net income was 14.9 billion rupees ($157 million) for the three months ended Sept. 30, according to an exchange filing Wednesday. While that is 55% lower than the year-ago profit, the result marks a return to the black after the company reported a loss of 11.6 billion rupees in the previous quarter amid costs linked to settlement of US legal cases. Revenue climbed 75% year-on-year to 372.2 billion rupees, while costs rose 71% to 360.2 billion rupees. Shares of the Adani Group flagship slipped 0.4% after the earnings were announced, in line with a fall in the S&P BSE Sensex.
The return to profitability could ease investor concerns about funding requirements for expansion and the view that newer businesses are approaching an earnings inflection point. Airports, data centers, roads and clean-energy ventures are expected to play a growing role in the company's profit mix as they start generating cash flow. Revenue from integrated resources management, a unit that mostly consists of coal trading and contributes the most to overall revenue, rose 6.6% to 70.97 billion rupees. The airports business is surging, with revenue rising 15% to nearly 37 billion rupees.
Gross debt slipped 0.3% from the preceding quarter to 972.94 billion rupees. The company accelerated its growth plans after resolving its legal troubles in the US. In May, the Department of Justice dropped criminal bribery charges against Adani and his nephew, Sagar Adani, after they agreed to pay $18 million to settle a parallel civil fraud case. Separately, Adani Enterprises paid $275 million to resolve a sanctions probe by the Office of Foreign Assets Control. Neither the executives nor the company admitted wrongdoing.
The stock rallied 43% earlier this year after the US probes were resolved, but it has tumbled more than 20% from its July peak, wiping out almost $10 billion in market value. Growth prospects for its airport and copper businesses, as well as its joint venture with Jabil for AI and data center equipment manufacturing, will stay in focus for investors in the coming months, with consensus expectations for the stock to rally more than 40% in the next 12 months.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing