Adani Group's Share Price Surge: Is This the Start of a Sustainable Bull Run?

The Adani Group's recent share price surge has captivated investors and skeptics alike. As of September 2025, Adani Enterprises Ltd (AEL) trades at a price-to-earnings (P/E) ratio of 45.65, more than triple the median P/E of its peers (13.14) Adani Green Energy FY25: Robust Growth in …^[4]. Its price-to-book (P/B) ratio of 6.37 also dwarfs the sector average of 0.15 India Budget 2025: Key highlights for the energy and the infrastructure sectors^[1]. These metrics raise a critical question: Is the current valuation a realistic reflection of the company's fundamentals, or is it a speculative bubble fueled by macroeconomic tailwinds?

Valuation Realism: A Tale of Two Metrics

AEL's valuation appears stretched when compared to historical benchmarks. Over the past six years, its average P/E ratio has been 109.60, with a peak of 285.51 in 2022 2025 Commodity Market Trends: Key Drivers & Price Analysis^[5]. The current P/E of 45.65, while lower than its all-time high, still sits far above the industry median. Similarly, the P/B ratio of 6.37 is a stark contrast to the sector average, suggesting the market is pricing in significant growth expectations.

However, operational performance provides some justification. AEL reported a 26% year-over-year increase in EBITDA to ₹16,722 crore in FY25 Adani Enterprises Announces FY25 Results – EBITDA Increased By 26 To Rs 16722 Crore^[2], driven by its renewable energy and infrastructure divisions. Adani Green Energy, a key subsidiary, achieved an EBITDA of ₹8,818 crore, surpassing $1 billion for the first time Adani Green Energy FY25: Robust Growth in …^[4]. These figures highlight the company's ability to scale high-growth businesses, which could justify a premium valuation if growth continues.

The disconnect between valuation and fundamentals, though, remains concerning. For instance, AEL's P/B ratio of 6.37 implies that investors are paying six times the book value for assets that, in many traditional industries, would trade at a discount. This premium is only sustainable if the company consistently outperforms peers and delivers on ambitious growth targets, such as scaling its renewable energy capacity to 50 GW by 2030 Adani Green Energy FY25: Robust Growth in …^[4].

Macroeconomic Tailwinds: A Perfect Storm?

India's macroeconomic environment in 2025 has been a tailwind for Adani. The country's GDP growth hit 7.8% in Q1 2025, the highest in five quarters, driven by robust private consumption and infrastructure spending Global Rate Cuts 2025: Impact on Indian Stock and Bond Markets ...^[3]. This growth aligns with Adani's strategic focus on infrastructure, where the group plans to invest $2.5 trillion over the next decade India Budget 2025: Key highlights for the energy and the infrastructure sectors^[1].

Global interest rate trends have also bolstered investor sentiment. Central banks, including India's Reserve Bank of India (RBI), cut rates in 2025 to stimulate growth, with the repo rate dropping to 5.5% India Budget 2025: Key highlights for the energy and the infrastructure sectors^[1]. Easier financing has attracted foreign institutional investors (FIIs), who turned net buyers in Indian equities by April 2025 Global Rate Cuts 2025: Impact on Indian Stock and Bond Markets ...^[3]. Adani's infrastructure and energy sectors, which require heavy capital expenditure, benefit directly from lower borrowing costs.

Government policies further amplify these tailwinds. The 2025-26 budget allocated ₹600 crore for the National Green Hydrogen Mission and ₹20,000 crore for the Nuclear Energy Mission India Budget 2025: Key highlights for the energy and the infrastructure sectors^[1]. These initiatives align with Adani's renewable energy and green hydrogen ambitions, reducing regulatory and cost risks. Additionally, subsidies for solar manufacturing and exemptions on critical minerals like lithium are expected to boost domestic production of EV batteries, a sector where Adani is positioning itself as a key player India Budget 2025: Key highlights for the energy and the infrastructure sectors^[1].

Global Commodity Trends: A Double-Edged Sword

While India's domestic growth story is compelling, global commodity dynamics introduce complexity. Energy prices in 2025 remain volatile, with oil averaging $70/barrel due to OPEC+ cuts but facing downward pressure from U.S. shale production India GDP Annual Growth Rate^[6]. For Adani, which operates in both traditional and renewable energy, this volatility could create headwinds. However, the company's pivot to renewables—such as its 50 GW Khavda project—positions it to benefit from long-term decarbonization trends.

Agricultural and metal markets also present mixed signals. Weak Chinese demand has stabilized metal prices, but U.S. tariffs on steel and aluminum could disrupt supply chains 2025 Commodity Market Trends: Key Drivers & Price Analysis^[5]. Adani's exposure to construction materials and infrastructure projects may face margin pressures if trade policies tighten. Conversely, India's growing population and urbanization could offset some of these risks by creating new demand for infrastructure and energy.

Risk Factors: Overvaluation and External Shocks

The most pressing risk is overvaluation. AEL's P/E and P/B ratios are multiples of industry averages, and while EBITDA growth is impressive, sustaining such rates will require flawless execution. Any misstep in project timelines or cost overruns could trigger a sharp correction.

External shocks also loom. A stronger U.S. dollar, which suppresses global commodity demand, could dampen India's export-driven sectors India GDP Annual Growth Rate^[6]. Additionally, geopolitical tensions—such as U.S. tariffs on Chinese goods—might indirectly affect Adani's supply chains or market access.

Conclusion: A Calculated Bet

Adani Group's share price surge is underpinned by a mix of operational strength and macroeconomic tailwinds. While valuation metrics suggest the stock is expensive, the company's alignment with India's growth story—particularly in renewable energy and infrastructure—provides a rationale for optimism. However, investors must weigh the risks of overvaluation and global volatility.

For now, the bull case holds if Adani can maintain its EBITDA growth trajectory and execute its ambitious projects. But as history shows, even the most compelling stories can falter when fundamentals lag expectations.