The Adani Group is set to take its airport business public by 2028, aiming to double its capacity and invest $21 billion over the next decade.
The Adani Group, one of India’s largest conglomerates, is making headlines with its plans to launch an initial public offering (IPO) for its airport business by the fiscal year 2028. This strategic move marks a significant milestone for the group, as it looks to expand its presence in the rapidly growing aviation sector in India. Adani Airport Holdings, a subsidiary of Adani Enterprises, manages several key airports across the country, and the IPO is expected to raise substantial capital for future developments.
The Growth of the Adani Group’s Airport Business
The Adani Group currently operates eight airports, with seven already fully functional, and the Navi Mumbai International Airport set to commence operations by 2025. The company has ambitious goals to increase its airport capacity, aiming to serve 400 million passengers by 2028. This expansion aligns with India’s growing aviation market, which is now the third-largest in the world, following the U.S. and China.
In its fiscal 2024 investor presentation, the Adani Group highlighted three primary revenue streams for its airport business: the aero business, which is driven by passenger traffic; the non-aero business, which focuses on duty-free shops, food, and beverages; and city-side developments, which involve real estate projects near airports. These diversified revenue sources are expected to drive the future growth of the business.
Why the Adani Group Is Focusing on Airports
India’s aviation industry is booming, with passenger traffic projected to grow by 8-11% in the 2024-25 fiscal year. The Adani Group sees this as a prime opportunity to strengthen its hold on the sector. The company already controls more than 50% of the top 10 domestic air routes and accounts for 25% of the country’s air traffic. By investing in new airports and upgrading existing ones, the group aims to capture an even larger share of the market.
In line with these efforts, the Adani Group is planning to invest a staggering INR 1,750 billion ($21 billion) into its airport business over the next decade. This investment will not only enhance infrastructure but also focus on increasing non-aero revenues. Currently, the group’s non-aero business accounts for a smaller portion of revenue compared to its aero business, but there is potential for growth in this area, especially with planned real estate developments around major airports.
The Timeline for the IPO
The Adani Group’s plan to launch the airport business IPO by 2028 comes after careful consideration of market conditions and the company’s growth strategy. The group’s CFO, Jugeshinder Singh, has indicated that the company is targeting this timeline to ensure it can maximize the value of the airport business before listing it publicly.
Adani Enterprises, the parent company, has a track record of incubating successful businesses. Since going public in 1994, the group has listed six other independent companies, all of which now boast a combined market capitalization of over $10 billion. The airport business, with its strong revenue growth and diversified portfolio, is expected to follow suit and become a valuable entity within the Adani Group’s portfolio.
Investor Interest and Future Prospects
Analysts have already started to take notice of the airport business within Adani Enterprises. Brokerage firm Cantor Fitzgerald initiated coverage of Adani Enterprises earlier this year, giving it a “buy” rating and valuing the airport segment at ₹1,622 per share. Similarly, Jefferies has placed a “buy” recommendation on Adani Enterprises, with a price target of ₹3,800 per share. Both firms see significant potential in the group’s airport operations, especially with upcoming opportunities under India’s airport privatization plans.
The IPO of the airport business could further boost investor confidence in the Adani Group. Since the controversies surrounding the Hindenburg report earlier in 2023, the group has made a remarkable recovery, with shares of Adani Enterprises rebounding to their pre-controversy levels. The planned IPO is likely to attract both domestic and international investors, given India’s robust aviation growth and the Adani Group’s proven track record.
Conclusion
The Adani Group’s plans to launch an IPO for its airport business by 2028 represent a strategic move to capitalize on the booming aviation industry in India. With its focus on expanding capacity, increasing non-aero revenue, and investing heavily in infrastructure, the group is well-positioned to take advantage of the sector’s growth. As the IPO date approaches, all eyes will be on how the group navigates the challenges and opportunities ahead, cementing its position as a dominant player in the aviation sector.
