Adani group to invest $70 billion in green energy

Adani group to invest $70 billion in green energy

by 5paisa Research Team Last Updated: Dec 16, 2022 - 04:52 am 21.5k Views
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In India, there are two business groups that have the most aggressive plans to tap the green energy opportunity. Both have hefty valuations in the market, have ambitious business plans, dominate the various aspects of infrastructure and have deep pockets and business influence to match. Of course, we are referring to the Ambani group and the Adani group and their green energy plans. Now Gautam Adani has affirmed that his business group will invest $ 70 billion in clean energy and act as a facilitator for the green energy transition.

For a nation that is overly dependent on fossil fuels and where the levels of industrial pollution are extremely high, this is the need of the hour. Clearly, the Adani group is leading the race to transform India from an over-reliant importer of oil and gas to a situation wherein India might one day become a net exporter of clean and green energy. This was part of the elaborate and ambitious plans laid out by Gautam Adani on the occasion of the annual general meeting (AGM) of Adani group on the 26th of July 2022.

The Adani group is already working aggressively on making green hydrogen, which is being touted as the fuel of the future. Incidentally, Green hydrogen refers to hydrogen that is generated from the electrolysis of water, with the entire process run on renewable energy. Parts of the group plans include making Adani Green Energy the world's largest solar power developer and a target of 45 GW renewable energy capacity by 2030. Adani will also invest a whopping sum of $20 billion to develop a 2 GW per year solar manufacturing capacity.

Among the aggressive plans of Adani group are also a lot of macro plans that are in sync with the priorities of India as a nation. Adani Transmission plans to increase the share of renewable power procurement from the current 3% to 30% by FY23 and further to 70% by FY30. Many of its businesses like ports, airports, power are all fossil fuel intensive. The green shift for the Adani group is a matter of commitment to reduce the fossil fuel footprint on its business activities so that the overall goals are in sync with that of national goals.

The Adani group is also working on the confluence of technology and a green future. For example, the Adani group has now entered into sectors ranging from data centres, digital super apps and industrial clouds. Apart from the more mundane cement purchases that it did recently, Adani has also forayed into defence and aerospace, metals and materials. Broadly, the philosophy of the Adani group, as outlined in the AGM of the company would be staying tech savvy, ahead of the curve in going green and sync with national priorities.

Laying out the future vision for the Adani group, Gautam Adani outlined that their group market cap had crossed $200 billion. It is not only the fastest clip of growth, but Adani is now the third largest group in terms of market cap after the Tatas and Reliance. This gives the group heft in terms of inorganic currency, influence in the market and a strong presence in the specific sectors that the company operates in. The big challenge will be to become more cash generating so that it can reduce the level of net debt in the coming years.

As Gautam Adani put it, the group would continue to grow as the nurturing agents and builders of India's infrastructure. This would obviously include bidding aggressively for mega road contracts in the nation and growing its substantial market share in related businesses such as ports, logistics, transmission and distribution. It has also forayed in a big way into city gas and piped natural gas. Clearly, the group is setting its rules and ensuring that shareholder value is enhanced in the process.
 

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Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

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Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.
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