Adani Enterprises Ltd’s shares slipped after it posted a 38% fall in quarterly profit, hurt by a one-time charge to provide for Covid-era airport dues.

The flagship for billionaire Gautam Adani’s group posted net income of 4.51 billion rupees for the quarter ended March 31, compared with 7.2 billion rupees a year ago, according to an exchange filing Thursday. There still weren’t enough brokerages with profit forecasts to derive an average estimate. Shares fell 0.5% after the earnings were announced.

Its unit Mumbai International Airport Ltd, or MIAL, recognised a one-time exceptional expense of 6.27 billion rupees to make up for past payments, the filing said.

The Covid-19 pandemic forced MIAL “to invoke force majeure provision,” the company said, as there were significant disruption in operations amid a nationwide lockdown that had grounded all air travel in India. As a result, MIAL did not pay the fees to the Airports Authority of India, which led to arbitration proceedings. The company has now provided for a part of those dues, triggering this one-time expense.

Revenue for the Ahmedabad-based firm climbed 0.8% to 291.8 billion rupees while total costs rose 2% to 283.1 billion rupees, the filing said.

Ambitious plans

The tepid earnings by Adani Group’s holding company shows that the ports-to-power conglomerate still has to navigate a few hurdles alongside its ambitious plans to invest US$100 billion in green energy transition and scale up other businesses. It battled a brutal short seller attack in early 2023 but has been clawing back lost ground since.

Adani Enterprises, known as the group’s incubator for new units that are later spun off, is also redeveloping Mumbai’s storied Dharavi slum and building a second airport on the city’s outskirts. It oversees a motley mix of businesses ranging from airports to data centres and green hydrogen to metals.

Revenue at the firm’s Integrated Resource Management unit, which mostly consists of coal trading, slipped 1.7% to 185.21 billion rupees in the March quarter.

The conglomerate’s airport business - forecast to be a key growth driver over the next few quarters - rose 27% to 21.56 billion rupees. Revenue at the new energy ecosystem segment, which includes solar, wind and green hydrogen business, tripled to 27.06 billion rupees.

Adani Enterprises also kickstarted the first unit of a US$1.2 billion copper smelter - the tycoon’s first foray into metals refining - in end of March to cater to rising demand for the metal as India undertakes a massive overhaul and upgrade of its infrastructure.

Copper project

The copper site, located in Mundra, “targets to leverage the Adani Group’s existing infrastructure and strategic location,” Jefferies analyst Prateek Kumar wrote in a March 31 note. The conglomerate already has a massive port at Mundra, Adani’s earliest and one of the biggest success stories.

The copper smelter project shows that the tycoon is back to aggressively diversifying his conglomerate that was built on coal trading, into newer lines of business. Adani’s breakneck growth of past few years was derailed after Hindenburg Research made bombshell allegations in January 2023 of wide-ranging corporate fraud. Adani Group has denied these claims.

Shares of Adani Enterprises rose 12.2% in the March quarter and about 58% in the past year but it hasn’t touched its pre-Hindenburg levels yet.

  - Bloomberg