Adani Enterprises Ltd.
Major incubating businesses are picking up momentum
Adani Enterprises Ltd. is focusing on expanding its businesses in coal infrastructure, green hydrogen, airports, and roads through its own companies, contributing significantly to its profits. With strong performance seen recently, it’s expected that these new ventures will grow and become more efficient, reducing the company’s need for external funding.
Focus on building one of the largest integrated green hydrogen business
Adani New Industries Limited (ANIL), part of Adani Enterprises, plans to build a big green hydrogen business. They’re making three large factories to produce 10 GW of solar panels, 10 GW of wind turbines, and 5 GW of hydrogen through electrolysis, aiming for low-cost green hydrogen production. They’ve finished building a glass factory for solar panels and started on the plant for ingots and wafers. In October, they began making India’s biggest wind turbine at 5.2 MW.
Adani Total Gas Ltd.
Favourable demand prospects backed by competitive advantages of CNG and PNG
In the first nine months of the financial year 2024, the percentage of CNG in the total fuel mix increased to 60% due to more CNG sales and less demand for PNG (industrial) because of higher gas prices. Gas sales grew 35% yearly, thanks to more CNG stations, new customers, and economic recovery. This growth includes CNG volume from new areas won in recent bids. ATGL adjusted its CNG and PNG prices up due to rising gas costs but kept them competitive against other fuels, benefiting from prioritised domestic gas allocation.
New revenue stream due to foray into e-vehicle segment
ATGL is expanding its business by entering the electric vehicle (EV) market with plans to set up 1,500 EV charging stations across India, leveraging its existing CNG station network. This move is expected to contribute to its future revenue growth. Additionally, ATGL has ventured into smart metre technology by acquiring a 50% stake in Smartmeters Technologies Ltd. This acquisition is aimed at creating new income sources by offering prepaid smart gas metres, indicating ATGL’s strategy to diversify and innovate for future revenue streams.
Grasim Industries Ltd.
Cement subsidiary to lead growth in the near period
UltraTech Cement Ltd., which is one of the subsidiaries of Grasim Industries Ltd., reported strong quarterly results and is expected to perform positively in the upcoming quarter as well. The estimated increase in cement demand coupled with subdued operational costs are likely to improve margins of the business going forward.
Commencement of a new paints business named “Birla Opus”.
After receiving the consent to operate the Panipat, Ludhiana, and Cheyyar plants, the company is all set to commence its paints business, “Birla Opus”, in Q4FY24. Along with this, the company has launched “PaintCraft” painting services in eight Indian cities. The company is also in the process of establishing a sales and distribution network for the upcoming paint business. We believe that the company’s venture into the paints business will provide scale and growth and reduce the cyclicality of the standalone business.
Hindalco Industries Ltd.
Increased focus on downstream activities
Hindalco is shifting its focus to more profitable business activities by developing an ecosystem for high-margin, value-added products. This includes supplying aluminium for projects like Vande Bharat trains and manufacturing air conditioners. Since this market is mostly served by smaller, unorganised companies, Hindalco’s technical know-how, financial resources, and strong brand make it well-positioned to become a leading player in these specialised areas soon.
Capex addition to strengthen market position
Hindalco has allocated a consolidated capex worth USD 3.1 billion towards setting up a new 600 Kt rolling mill facility in Alabama, Novelis. The facility will be state of the art, which will help the company to increase its footprint in the can recycling space and also increase its customer base in the automo-bile and aerospace field.
Enhanced testing capabilities to drive market confidence and expansion
The accreditation received by ITI Ltd.’s EMC Lab from the National Accreditation Board for Testing and Calibration Laboratories (NABL) has significantly bolstered the company’s position in the market. This accreditation reflects ITI’s proficiency in detecting even the slightest anomalies in the electromagnetic and electrical operations of various products. With the lab’s expanded testing scope, ITI Ltd. can now cater to a wider array of industries including industrial, commercial, information technology, tele-com, and medical fields.
Diversified product portfolio and government support fuel growth opportunities
ITI Ltd. is stepping into the laptop and micro PC market, focusing on products that use less power and are better for the environment. This move aims to meet the growing demand for sustainable technology. The company has a history of growing through government contracts, like a large Rs. 24.2 billion deal with BSNL that’s pushing them into 5G technology. ITI Ltd. is also working on other projects, like making electronic voting machines, offering data centre services, and producing water pipes and solar panels, showing its versatility and potential for growth.
Tata Consultancy Services Ltd.
Strategic focus on emerging technologies driving market leadership
TCS Ltd. is focusing on new tech like Gen AI, cloud services, cyber security, and digital transformation to lead the market. They’re creating cutting-edge products for different industries like fashion and banking, showing their commitment to innovation. With these technologies, TCS meets changing customer needs and stands out by integrating tech into its services.
Resilient operational strategies driving profitable growth amidst macroeconomic challenges
TCS is focusing on essential projects that quickly pay off, fitting well with clients’ needs during economic uncertainties. They have secured big deals recently, showing they can adapt to market changes. TCS is also working on keeping its team stable and reducing staff turnover, which helps improve their profit margins. With a strong backlog of projects and their position as market leaders, TCS is ready to handle tough economic times, promising strong returns and growth opportunities in the tech industry.
Tata Steel Ltd.
Enhancing Indian footprint to capture infra boom
Tata Steel Ltd. aims to double its production of long steel products, which are mainly used in construction, within six years to meet the growing demand from India’s infrastructure boom. They plan to increase Neelachal Ispat Nigam Ltd. (NINL)’s output from 1 million tons per annum (mtpa) to 5 mtpa and expanded Bhushan Steel’s Angul plant from 5 mtpa to 6.5 mtpa initially, aiming for 10 mtpa later. These expansions, which will be presented to the board in the next six months, are expected to cut costs and boost profits.
Restructuring of European operations to aid performance
The steel company plans to upgrade its UK operations by replacing traditional blast furnaces with more modern electric arc furnaces. This change is part of a broader strategy that also includes making their Netherlands plant profitable and cash flow positive by FY25. To support these efforts, they’re investing EUR 1.25 billion, with an additional EUR 500 million coming from the UK government. These investments are expected to enhance the company’s overall financial performance.
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Target (Rs) Potential Upside % Investment Horizon: ₹ 750 31.57%...
Target (Rs) Potential Upside % Investment Horizon: ₹ 750 31.57%...