Adani Green is now more valuable than State Bank of India – here's why
- Adani Green is now the seventh largest company in India by market capitalisation.
- This means that Adani Green is now more valuable than India’s largest bank, the State Bank of India, the largest private home finance company HDFC and tobacco giant, ITC, among others.
- We try to understand what is driving the rally in Adani Green, read on to find out.
AdvertisementAdani Green Energy is now the seventh largest company in India by market capitalisation, beating the government-owned State Bank of India, India’s largest bank, HDFC, India’s largest private home finance company and tobacco giant ITC.
Adani Green’s shares have surged over 50% in the last month. This is extremely impressive usually, but there are two other Adani group companies which have outperformed Adani Green by a huge margin.
In comparison, SBI’s share price has barely moved. It is up just 1.5% in the last month, and due to the surge in Adani Green, SBI has dropped one place to the eighth position in the list of largest companies in India by market capitalisation.
|Current market capitalisation
|Change in last one month
|State Bank of India
Adani group stocks are rallying
There has been a tremendous rally in Adani group stocks over the past few weeks, after these group companies took a beating earlier towards the end of 2021.
$ADANIGREEN.NSE @Stocktwits— (@HarmonicsTraders) April 26, 2022
Two companies – Adani Power and Adani Wilmar – crossed ₹1 lakh crore market capitalisation for the first time in their history, making Gautam Adani the fifth richest person in the world, beating Warren Buffett in the process.
So, what exactly is driving the massive rally in Adani Green’s stock?
There are three reasons.
1. Over 50% surge in total operational capacity
In an exchange filing earlier this month, Adani Green reported a surge of 56% in its total operational capacity to 5,410 megawatts (MW) in the March 2022 quarter, compared to a year ago.
In the same period, its total energy sales surged 84% to 2,971 million units, from 1,614 million units a year ago. This, together with the expansion of operational capacity, shows that the company’s business is growing.
2. A $500 million investment from Abu Dhabi-based International Holding Company
Adani Green raised $500 million (approx. ₹3,850 crore) in the form of primary capital from Abu Dhabi-based International Holding Company.
This, the company said, would help deleverage the balance sheet and improve the credit rating of Adani Green. In turn, this would help reduce the company’s cost of capital, and thereby, improve profits.
3. A nearly-$300 million debt pool to finance solar and wind power projects
Adani Green also raised $288 million (approx. ₹2,200 crore) in the form of a debt pool from seven international banks to help finance the company’s 450MW hybrid solar and wind power projects in Rajasthan.
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