UBS Investment on ADANI ENTERPRISES

Adani Enterprises is expected to get a fillip from the power business. We believe its power business earnings will grow rapidly (from our estimated PAT of Rs4.8bn in FY10 to Rs60.5bn in FY14), which would be a big positive. In addition to commissioned/under-execution 6,600 MW of capacity, Adani Power (APL) has 3,300 MW under development and 5,280 MW under planning. Given that the additional developments are largely at the same sites and its execution capabilities, we expect newsflow to remain robust. Moreover, the company has developed a large contract-mining portfolio with peak mining capacity of 70mtpa. There are many upcoming opportunities in the sector as other state electricity boards (SEBs) adopt the route of private sector contract mining and existing SEBs offer more contracts. We view it as more as a conglomerate as compared to the other holding companies. We set the twelve month’s price target at Rs 550 per share.