Which are the best Adani Group stocks for the long term? Replied by Prateek Madaan (Intelligent Investor) thru Quora

 

Adani Group stocks are some of the most riskiest bets that one can take in the stock market while investing. The reason for that is : Adani Group companies according to one of the reports are the most deeply overleveraged companies meaning that they are loaded up with huge debt. Along with that, most of the stocks from the Group have OK OK fundamentals meaning that the fundamentals are not that good if you want to invest in for long term. At the same time, most of the stocks trade at insane valuations which I feel are not sustainable in the long term. These are some of the reasons why I avoid investing in Adani stocks.

Have a look at the valuations of Adani Green. I agree that the Green Energy sector is a futuristic sector and it can change the world for the good because green energy is considered as a clean and renewable energy. Everyone is aware about the negative impact of the fossil fuels on the environment and hence a slow and steady transition towards cleaner sources of energy is indeed needed. The potential that this sector has to circumvent the negative effects of the fossil fuels, a transition is needed and hence such insane expectations from this stock is something that I feel is not sustainable. Lots of factors are already priced-in in this stock - like strong order book that they have, futuristic technology they are working in etc.

At the same time, the current inflationary environment is severely impacting these companies because of the hiked interest rates as a result of which these companies have to pay large interest on their high debt and loans that they have taken from the banks which can severely impact the operations of the company in the long term. So in order for this company to survive, it would need to bring rock solid and consistently growing numbers which is a challenge in itself. If it can do that, then the stock can further go up from here else it would suffer a downfall like no other stock.

PS : That’s my opinion. Feel free to share your own opinion down below. I would love to read your views on same.