Why is Adani Enterprises continuing with its rise in the stock markets?

Adani Enterprises is rising consistently!

 Adani Enterprises continuing with its rise in the stock markets

Adani enterprises, an Adani group stock, has given more than 150% returns in the last year. The returns in the last five years have been around 2900%. The spectacular performance of the stock is in line with other Adani group stocks. After Covid, the rise in the stock has been phenomenal.

The company was founded in 1988, and the company is headed by its chairman Gautam Adani. It started as a commodity trading business, but today its business interest span across commodities, Defence, Agriculture, Infrastructure, Transmission, Renewable Energy, Airports, etc. As per the Forbes ranking, Gautam Adani has become the third richest person in the world after Elon Musk and Bernard Arnault. Its market capitalization as a group is more than $250 billion, and the net worth of Gautam Adani, as per the latest Forbes data, is more than $150 billion.

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Reasons behind the rise of Adani Enterprises' share price

The reasons behind the rise of Adani Enterprises' share are:-

  1. Inclusion in Nifty50- The company is to be included in the Nifty50 index. This is big news for the investors in the stock, as many index funds and ETFs make investments in the index, and because of the inclusion in the index, the inflows into the stock can increase. This will lend some support to the stock price going forward, and the market is trying to price in the future increase in the stock. 
  2. Financial performance- The total revenue of the company increased by 225% in the first quarter of this financial year on a YOY basis. The growth was 64% on a quarterly basis. 
  3. Expansion across different businesses - Adani Enterprises is the flagship Adani stock. The growth in the stock has been because of the expansion of the group into different segments like green hydrogen, cement, etc. The company acts like an incubator of new businesses, and the expansion of the group across sectors is helping the firm command a premium in its share price. 
  4. Promoter holding- The company is known for high promoter holding, and the insiders have been buying the shares recently from the markets. The promoters bought 5 lakh shares in an open market transaction in September. The total transaction cost was Rs 180 crores. 

Related: High returns for investors: Adani gas share rises from Rs 900 to Rs 2485

The PE ratio of the stock is 448. Most of the stocks in the Adani Group are overvalued. The reasons are varied, like the expansion of the company, newer segments, high-growth sectors, etc. If the growth continues, the stock can make newer highs consistently. But because the stock is overvalued, new investors should be cautious before entering the stock. Also read about top 5 richest people in 2021

Adani stocks - buy or sell? | Fundamental Analysis

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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