Adani Enterpises priced 'too high': Damodaran

Mumbai: Aswath Damodaran, finance professor at Stern School of Business at New York University, said Adani Enterprises is priced 'too high' even at the stock's Friday closing price of ₹1,531 on the NSE, given its fundamentals and before factoring the damage that the Hindenburg report might have done to the company's reputation and long-term value.

In his blog published on February 4, Damodaran, a widely respected authority on valuations, said Adani Enterprises with 'upbeat' assumptions on revenue growth and operating margins, and without factoring any of the Hindenburg accusations of fraud and malfeasance, could be valued at ₹945. ET looks at his analysis:

Adani: Buy or sell?


"Even with a further share drop, I am not tempted to buy shares in Adani companies. I don't think that there is much doubt that the market was overstretched when it valued the Adani firms collectively at $220 billion (₹17.6 lakh crore) and Adani Enterprises at $53 billion (₹4.24 lakh crore)."

Family group company risks

"Investors in family group companies, no matter how honourable the family, are buying into cross holdings, opacity and the possibility of wealth transfers across family group companies. Those risks increase if the family group companies are built around political connections, where you are one political election loss away from your biggest competitive advantage."