It's difficult for Indian parents to point to Gautam Adani while telling their kids, "Don't you want to become like him?" Adani is after all, a college dropout. He was probably the kid adults called "a bad influence". 

Now, to the frustration of Indian parents everywhere, Adani has become even richer, with Bloomberg placing him as the third wealthiest man in the world in 2022. 

In this week's Analyticks:

• It's raining gold: Adani's wealth rose even as many billionaires became poorer
• Capex spending is on fire for Indian businesses: Companies are scaling up investment to meet domestic demand

In 2020, Gautam Adani was far from wearing the "richest three" crown. He had just $10 billion in net worth and was behind Mukesh Ambani in the billionaire race. 

Come 2022, and how fortunes have changed. Adani has seen a jump in his net worth that beats any fairytale - it has multiplied 14X between Jan 2020 and now. He is now worth $143 billion, making him the third richest behind just Elon Musk and Jeff Bezos. Ambani is behind him, ranked tenth. 

Much of this wealth has been driven by the rise of Adani stocks, which are at eye-watering, triple digit PE valuations. Adani Green Energy trades at 764 PE, while Adani Transmission trades at 458 PE.

Compare this to Reliance Industries, which trades at 26.3 PE. Despite the octopus nature of Bezos' Amazon's business, it trades at 116 PE, while Musk's Tesla trades at 99.1. 

The rapid rise in Adani stocks over the last two years explains Gautam Adani's jump in the wealthiest list, even as other fortunes crumbled as markets turned volatile.  Musk and Bezos, for example, saw their net worth decline as the value of Amazon and Tesla stocks fell in the year to date. Adani is also well ahead of other Indian billionaires.

The Adani group currently has a combined market cap of over $250 billion (approximately Rs 20 lakh crore). However, the challenge is that these businesses are "deeply over-leveraged" and loaded with low cash flow and high debt, as a recent CreditSights report put it, which means that Adani's net worth “is paper wealth, and tied to the valuations of his holdings in the Adani Group’s stocks". There's also the concern of the group's non-transparent shareholding, with anonymized shareholders like the APMS Investment Fund holding large stakes in Adani companies.

Rising debt in Adani companies is in contrast to Reliance's efforts to sharply cut debt levels. The crown is shiny for Adani, but high levels of debt are a shaky foundation to build a business, or net worth on.  

Capex forecasts show aggressive spending plans in FY23

The outlook for India is brighter than the global economy, and that is showing up in the aggressive spending plans among Indian businesses. International as well as domestic analysts are bullish on spending, thanks to the healthy balance sheets of the Indian private sector, and rising domestic demand. Government policies have also been increasingly supportive of Indian industry, which is giving businesses confidence that the large investments they make will pay off. 

As a result, the planned capex for the year across major industries is soaring. This screener (subscriber) looks at the estimated annual capex spending for India's top businesses in FY23. Industries such as refineries, oil production, electric utilities and telecom are all seeing big spending estimates. 

This spending is partly driven by where India is on the development curve. As India's GDP ramps up, companies are building the "once in a country's history" essential infrastructure, that is needed to take the economy to the next level. This is like the infrastructure spending European and US economies saw in the 1950s and 1960s, and China saw in the 1970s as their GDP jumped. Large capex spends are being earmarked in critical sectors like metals, electric utilities, telecom and cement to meet the rising demands of Indian consumers.

For example, cement companies like Ultratech Cement and Grasim Industries have planned annual capex in the range of Rs. 50,000 crore. Sectors like auto are also seeing big outlays from companies like Tata Motors, as businesses focus on new models and the EV transition. 

Companies are also moving up the value chain as their prospects improve. Rising global market share for India's chemical and fertilizer companies are pushing them towards higher-margin specialty compounds, and they are investing to build capacity here. The major companies in real estate and retail such as Avenue Supermarts, Prestige Estates, and Phoenix Mills, have also earmarked annual capex in the range of Rs. 20,000 crore. 

The full screener on planned capex spends is here.