Adani Enterprises proposed restructuring creates value for shareholders due to elimination of the holding company discount on ADE’s holdings in APSEZ and APL. Also, a listing for its transmission assets will unlock value of ~Rs25bn equity invested besides giving it ability to expand its portfolio. APL is in the process of availing refinancing under the 5/25 scheme for its operating power projects and as such, it is unlikely to need further cash support from the parent/promoters.
With the recent rally in the stock price the upside from elimination of holding company discount appears to be largely factored. However, a 16% upside in the APSEZ stock (based on our fair value) and listing of the transmission business would be key stock drivers going forward. CLSA maintain outperformer with revised price target of Rs740.
