Multibagger Adani stocks at astronomically-high PE of up to 790x! Still a buy?

Out of the seven Adani Group stocks listed on the stock exchanges, 5 have given a gravity-defying return of at least 100 per cent so far in the calendar year 2022, propelling the rise of Gautam Adani into the list of top 3 billionaires in the world.

On a year-to-date basis, is top gainer in the billionaire's family by generating an astounding return of nearly 300 per cent. The list is followed by , , and .

Energy's return of over 74 per cent YTD is no less impressive in a volatile market when the headline index Nifty has gained just 1.2 per cent.


Although most Adani Group stocks have never been cheap in recent years, the above graph shows they are now demanding a price-to-equity (PE) valuation going as high as 790x. A PE multiple of 790 means that investors are paying 790 times the present earnings of a company. In case of Adani stocks, five of them have PE multiples of above 100x.

Adani Total Gas is the most expensive stock in the pack by demanding a PE of 790.53 as against the industry PE of 140.29. 's PE is also as high as 757.59, followed by Adani Transmission (450.5) and Adani Enterprises (403.64).

“Given the short time period against these bumper returns, if I had been fortunate enough to enjoy the ride, I would be looking to re-deploy into other stocks that were relatively cheaper,” Arun Chulani, Research Analyst, First Water Capital, said.

While most Adani stocks hardly have any coverage by major brokerages, analysts say traders who have bought the stock for momentum can stick around till the time the trend changes.

“There are others who bought it for a trade, and they would have to decide their comfort level on exit. For us, companies that are expanding and funding their growth predominantly on debt, are not investments we like. We are happy to watch the party from the sidelines,” said

Naveen Chandramohan, Founder and Fund Manager, ITUS Capital.

Trendlyne data shows that while Adani Power has zero coverage by analysts, 3 other companies - Adani Total Gas, Adani Green and Adani Enterprises have only one analyst recommendation each.

Adani Ports, which is the group's cash cow, has the highest coverage by 22 brokerages.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)