Adani Enterprises stock: Copper smelter targets 85% utilisation

Adani Enterprises is preparing for a faster copper ramp-up after Kutch Copper raised its utilisation target for the smelter. The Economic Times reported on Friday, November 6, that the unit now expects to reach 80% to 85% capacity utilisation by March, compared with an earlier target of 75%.

Supply security supports higher utilisation

Manan Vakharia, head of finance at Adani Enterprises, told analysts that the company has secured about 50% to 60% of its copper concentrate needs through long-term contracts. A further 20% is contracted on a short-term basis, according to The Economic Times.

Kutch Copper operated at 64% utilisation in the September quarter. It produced 80,200 tonnes and sold 80,600 tonnes, generating revenue of INR 14,843 crore and EBITDA of INR 1,283 crore in the quarter.

Margins remain the key execution risk

For the first half of the fiscal year, the copper business generated EBITDA of INR 2,033 crore, compared with an operating loss of INR 320 crore a year earlier. The company has already achieved about 65% of its full-year EBITDA target of INR 3,100 crore.

The near-term improvement is not a straight-line earnings guarantee. Higher sulphuric-acid prices are currently supporting profitability, but The Economic Times reported that these prices may moderate. Long-run margins are expected to be around 5%, compared with about 8.6% in the September quarter.

India's broader equity market remains the wider backdrop for Adani Enterprises' expansion-led investment case; Current market reports provide the latest market context.

For investors, the next test is whether higher throughput can offset less supportive by-product pricing. The copper ramp-up adds an important operating driver, but sustainable margins and reliable concentrate access will determine how much of the early earnings contribution can persist.