Equal
…
…
ROE = tax × interest × margin × turnover × leverage
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Tax burden | 0.63x | 0.60x | 2.29x | 2.05x | 0.88x |
| Interest burden | 0.95x | 0.98x | 0.92x | 0.93x | 0.97x |
| Operating margin | 39.1% | 52.6% | 36.6% | 34.8% | 28.0% |
| Asset turnoverdriver | 0.53x | 0.75x | 0.20x | 0.31x | 0.27x |
| Leverage (equity mult.) | 1.70x | 1.65x | 1.41x | 1.25x | 1.36x |
| = Return on Equity (consolidated) | 20.9% | 38.2% | 22.2% | 25.7% | 8.9% |
| Return on Invested Capital (ROIC) | 22.1% | 39.0% | 10.5% | 13.5% | 9.2% |
Consolidated (pre-minority-interest) basis; the headline ROE in the ratio grid is owners’ basis.
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Current Ratio(Current Assets / Current Liabilities) | 2.08x | 2.17x | 2.01x | 4.02x | 2.56x |
| Quick Ratio((Current Assets − Inventory) / Current Liabilities) | 1.99x | 2.09x | 1.93x | 3.87x | 2.43x |
| Cash Ratio(Cash / Current Liabilities) | 1.33x | 1.66x | 1.55x | 2.17x | 1.21x |
| Working Capital(Current Assets − Current Liabilities) | $ 1.5 B | $ 2.9 B | $ 2.2 B | $ 2.0 B | $ 1.3 B |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Debt to Equity (DER)(Total Debt / Total Equity) | 0.36x | 0.24x | 0.19x | 0.11x | 0.16x |
| Liabilities to Equity(Total Liabilities / Total Equity) | 0.70x | 0.65x | 0.41x | 0.25x | 0.36x |
| Debt to Assets(Total Debt / Total Assets) | 0.21x | 0.15x | 0.14x | 0.09x | 0.12x |
| Net Debt(Total Debt − Cash) | -$ 204 M | -$ 2.5 B | -$ 1.9 B | -$ 826 M | -$ 223 M |
| Interest Coverage(EBIT / Interest Expense) | 18.72x | 51.42x | 12.22x | 14.75x | 31.48x |
| Equity Multiplier (Assets ÷ Equity) | 1.70x | 1.65x | 1.41x | 1.25x | 1.36x |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Gross Margin(Gross Profit / Revenue) | 44.3% | 57.4% | 40.6% | 42.0% | 34.0% |
| Operating Margin(EBIT / Revenue) | 39.1% | 52.6% | 36.6% | 34.8% | 28.0% |
| Net Margin(Net Income / Revenue) | 23.4% | 30.8% | 76.9% | 66.4% | 23.9% |
| EBITDA(EBIT + D&A) | $ 2.0 B | $ 4.8 B | $ 1.0 B | $ 952 M | $ 751 M |
| EBITDA Margin(EBITDA / Revenue) | 50.2% | 58.7% | 47.1% | 45.8% | 40.1% |
| Return on Assets (ROA)(Net Income / Total Assets) | 12.3% | 23.1% | 15.7% | 20.6% | 6.6% |
| Return on Equity (ROE)(Net Income (Owners) / Equity (Owners)) | 22.6% | 41.4% | 24.2% | 28.0% | 10.0% |
| Tax Burden (Net ÷ Pretax) | 0.63x | 0.60x | 2.29x | 2.05x | 0.88x |
| Interest Burden (Pretax ÷ EBIT) | 0.95x | 0.98x | 0.92x | 0.93x | 0.97x |
| Return on Invested Capital (ROIC) | 22.1% | 39.0% | 10.5% | 13.5% | 9.2% |
| Turnover | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Asset Turnover(Revenue / Total Assets) | 0.53x | 0.75x | 0.20x | 0.31x | 0.27x |
| Inventory Turnover(COGS / Inventory) | 17.68x | 17.32x | 7.41x | 12.05x | 10.66x |
| Receivables Turnover(Revenue / Receivables) | 8.83x | 12.52x | 4.10x | 5.94x | 4.77x |
| Payables Turnover(COGS / Payables) | 8.16x | 10.35x | 3.68x | 7.61x | 7.22x |
| Conversion Period | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Days Inventory Outstanding (DIO)(365 × Inventory / COGS) | 20.6 days | 21.1 days | 49.3 days | 30.3 days | 34.2 days |
| Days Sales Outstanding (DSO)(365 × Receivables / Revenue) | 41.3 days | 29.2 days | 89.0 days | 61.5 days | 76.6 days |
| Days Payable Outstanding (DPO)(365 × Payables / COGS) | 44.7 days | 35.3 days | 99.3 days | 48.0 days | 50.6 days |
| Cash Conversion Cycle (CCC)(DIO + DSO − DPO) | 17.2 days | 15.0 days | 39.0 days | 43.8 days | 60.2 days |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Free Cash Flow(Operating Cash Flow − Capex) | $ 1.3 B | $ 3.5 B | $ 567 M | -$ 501 M | -$ 207 M |
Price Rp 2,460 · market cap Rp 71 T ($ 3.9 B at the cited rate; statements are filed in USD)
| Multiple | ADRO | Peer median | vs median |
|---|---|---|---|
| P/E | 8.76x | 16.25x(15/16) | -46% |
| P/B | 0.87x | 1.68x | -48% |
| P/S | 2.09x | 1.92x | +9% |
| EV/EBITDA | 5.62x | 10.31x | -46% |
| EV/EBIT | 8.05x | 14.25x | -43% |
| EV/Sales | 2.25x | 2.27x | -1% |
| FCF Yield | -5.29% | 0.01% | -50,306% |
| Dividend Yield | 11.40% | 5.27%(11/16) | +116% |
EV = mkt cap $ 3.9 B + debt $ 821 M − cash $ 1.0 B + minority interest $ 519 M = $ 4.2 B
not computable: negative or zero base-year FCF. Shown as-is rather than estimated.
Reverse DCF: single-stage FCF, terminal growth 2.5%, discount band 9.3–13.3% (β=1; build cited in Methodology). Not a forecast.
This model projects the operating cash the whole business generates, discounts it back at the blended cost of capital, and subtracts net debt. What remains is the equity value, stated per share. Every input below comes from the company's own audited record or from cited market data, and you can adjust each one yourself.
Cyclical normalization: Commodity/cyclical name: the trailing years are a sample drawn from the price cycle, not a trend. Defaults are therefore normalized, using the full-window mean margin with no cycle-position growth extrapolation. That normalized margin is itself the embedded commodity-price assumption.
Base year contains named one-off item(s): FY2023–FY2024: AADI spin-off disposal gains dominate reported net income across two fiscal years. The EBIT basis screens out most non-operating items, but read the Earnings Quality section before trusting the base margin.
| Assumption | Value | Basis |
|---|---|---|
| Rf (risk-free) | 4.66% | US 10Y Treasury, 30 Jul 2026 |
| ERP (Rm − Rf) | 6.69% | Damodaran Indonesia, Jul 2026 (Baa2, CRP 2.46%) |
| β | 0.96 → 1.09 | Metals & Mining (unlevered) relevered at own D/E 0.21 |
| Cost of equity | 11.96% | Rf + β × ERP |
| Cost of debt | 6.68% | median interest coverage 18.7x (EBIT ÷ interest, FY2021–FY2025) implies a Aaa/AAA synthetic rating and a 0.40% default spread, over a 6.28% base (US 10Y 4.66% + Indonesia's 1.62% sovereign spread). Its BOOK rate is 2.0%, which is what past debt actually costs; the gap is legacy or subsidised borrowing, not the rate on new debt. Spread table: A. Damodaran, Ratings, Interest Coverage Ratios and Default Spread, January 2026 data update (large non-financial service firms) |
| Tax rate | 35.0% | median effective rate FY2021–FY2025 computed to 36.8%, CLAMPED to 35%: above that ceiling the pretax approximation is carrying minority interests, which are already deducted separately from enterprise value, rather than tax |
| WACC | 10.64% | 83% E × CoE + 17% D × Kd × (1 − t) |
| Revenue growth (yr 1, fading) | 2.5% | terminal growth from year 1, cyclical normalization: the delivered 4-yr CAGR (-17.2%) reflects cycle position, not a trend |
| EBIT margin | 38.2% | full-cycle mean EBIT margin, FY2021–FY2025 (cyclical normalization: this margin is the embedded commodity-price assumption) |
| D&A / revenue | 11.2% | mean D&A/revenue, last 3 FYs |
| Capex / revenue | 36.8% | mean capex/revenue, last 3 FYs, for the explicit years. The terminal year instead FUNDS ITS OWN GROWTH: in stable growth g = reinvestment rate x return on capital, and returns are assumed to converge to the 10.6% cost of capital, so the perpetuity reinvests 23.5% of NOPAT and terminal capex is 16.9% of revenue against depreciation of 11.2%. Both simpler rules are wrong in opposite directions: holding the historical ratio charges a build phase in perpetuity, while setting capex equal to depreciation hands the company 2.5% growth forever for no new capital. Because returns converge to the cost of capital, terminal growth here is value-neutral |
| ΔNWC / Δrevenue | 3.9% | median ΔNWC/Δrevenue across the seeded years (NWC = AR + inventory − AP) |
| Terminal growth | 2.5% | BI inflation-target midpoint (2.5% ± 1%) |
Each default is the company's own historical average, which describes the phase it happened to be in. Switch a driver to Per-year when that phase is ending: a company mid-build does not spend at its peak rate forever, and one in a capex pause does not stay there. The terminal year keeps its own ratios, so a taper you enter here changes the explicit window and leaves the perpetuity coherent.
| Year | +1 | +2 | +3 | +4 | +5 | T∞ |
|---|---|---|---|---|---|---|
| Growth | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Revenue | $ 1.9 B | $ 2.0 B | $ 2.0 B | $ 2.1 B | $ 2.1 B | $ 2.2 B |
| EBIT | $ 734 M | $ 752 M | $ 771 M | $ 790 M | $ 810 M | $ 830 M |
| NOPAT | $ 477 M | $ 489 M | $ 501 M | $ 514 M | $ 526 M | $ 540 M |
| + D&A | $ 215 M | $ 220 M | $ 226 M | $ 231 M | $ 237 M | $ 243 M |
| − Capex | $ 707 M | $ 725 M | $ 743 M | $ 761 M | $ 780 M | $ 368 M |
| − ΔNWC | $ 1.8 M | $ 1.9 M | $ 1.9 M | $ 2.0 M | $ 2.0 M | $ 2.1 M |
| FCFF | -$ 17 M | -$ 17 M | -$ 18 M | -$ 18 M | -$ 19 M | $ 413 M |
| PV | -$ 15 M | -$ 14 M | -$ 13 M | -$ 12 M | -$ 11 M | $ 3.1 B |
Check it yourself: revenue × margin = EBIT · NOPAT = EBIT × (1 − tax) · FCFF = NOPAT + D&A − Capex − ΔNWC · PV = FCFF ÷ (1+WACC)^yr · TV = FCFF(T∞) ÷ (WACC − g), discounted from year 5 · equity = EV − net debt − minority · per share = equity ÷ shares outstanding
EV = PV(explicit) -$ 66 M + PV(TV) $ 3.1 B = $ 3.0 B · TV 102% of EV · − net debt -$ 223 M − minority $ 519 M = equity $ 2.7 B ÷ shares outstanding · per share is in USD, shown in IDR at 18,058
Model output: Rp 1,692/share (-31% vs price Rp 2,460)· exit-multiple check (10.3x): Rp 3,857
Under these assumptions the model lands 31% below today's price. The market, in other words, is paying for faster growth, a fatter margin, or a lower discount rate than the inputs here assume.
| g \ WACC | 9.6% | 10.6% | 11.6% |
|---|---|---|---|
| 2.0% | 1,877 | 1,552 | 1,299 |
| 2.5% | 2,061 | 1,692 | 1,407 |
| 3.0% | 2,272 | 1,850 | 1,529 |
Model output under the stated assumptions. Every input above comes from the company's own audited record or from cited market data, and every one can be adjusted. This is not a price target and not advice.
Educational analysis. Multiples pair today’s price with the latest audited fiscal year (trailing-FY convention); peer figures are the covered peer sample, not the whole market. Never a price target.
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Revenue | $ 4.0 B | $ 8.1 B | $ 2.1 B | $ 2.1 B | $ 1.9 B |
| Cost of Goods Sold | $ 2.2 B | $ 3.4 B | $ 1.3 B | $ 1.2 B | $ 1.2 B |
| Gross Profit | $ 1.8 B | $ 4.7 B | $ 868 M | $ 874 M | $ 637 M |
| Operating Income (EBIT) | $ 1.6 B | $ 4.3 B | $ 781 M | $ 724 M | $ 524 M |
| Interest Expense | $ 83 M | $ 83 M | $ 64 M | $ 49 M | $ 17 M |
| Net Income | $ 933 M | $ 2.5 B | $ 1.6 B | $ 1.4 B | $ 448 M |
| Net Income Attributable to Owners | $ 933 M | $ 2.5 B | $ 1.6 B | $ 1.4 B | $ 448 M |
| Depreciation & Amortization | $ 445 M | $ 491 M | $ 224 M | $ 228 M | $ 227 M |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Cash & Equivalents | $ 1.8 B | $ 4.1 B | $ 3.3 B | $ 1.4 B | $ 1.0 B |
| Accounts Receivable | $ 452 M | $ 647 M | $ 520 M | $ 350 M | $ 393 M |
| Inventory | $ 126 M | $ 199 M | $ 171 M | $ 100 M | $ 116 M |
| Current Assets | $ 2.8 B | $ 5.3 B | $ 4.3 B | $ 2.6 B | $ 2.2 B |
| Total Assets | $ 7.6 B | $ 11 B | $ 10 B | $ 6.7 B | $ 6.8 B |
| Accounts Payable | $ 272 M | $ 333 M | $ 345 M | $ 158 M | $ 171 M |
| Current Liabilities | $ 1.4 B | $ 2.4 B | $ 2.1 B | $ 647 M | $ 861 M |
| Total Liabilities | $ 3.1 B | $ 4.3 B | $ 3.1 B | $ 1.3 B | $ 1.8 B |
| Total Interest-Bearing Debt | $ 1.6 B | $ 1.6 B | $ 1.4 B | $ 580 M | $ 821 M |
| Total Equity | $ 4.5 B | $ 6.5 B | $ 7.4 B | $ 5.4 B | $ 5.0 B |
| Equity Attributable to Owners | $ 4.1 B | $ 6.0 B | $ 6.8 B | $ 4.9 B | $ 4.5 B |
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | |
|---|---|---|---|---|---|
| Operating Cash Flow | $ 1.4 B | $ 3.9 B | $ 1.2 B | $ 335 M | $ 594 M |
| Capital Expenditure | $ 180 M | $ 402 M | $ 585 M | $ 837 M | $ 802 M |
ADRO gross margin: 44.3 % (2021) → 57.4 % (2022) → 34.0 % (2025, normalised post-restructuring). OPM: 39.1 % → 52.6 % → 28.0 %. Net margin: 23.4 % (2021) → 30.8 % (2022) → 76.9 %/66.4 % (2023–2024, disposal gains from AADI spin-off, not operating) → 23.9 % (2025). ROE: 22.6 % (2021) → 41.4 % (2022) → 10.0 % (2025). ROIC: 22.1 % → 39.0 % → 9.2 %. D/E: 0.36 → 0.24 → 0.16. Asset turnover: 0.53× (2021) → 0.75× (2022) → 0.20–0.31× (2023–2024, revenue base shrank post-AADI) → 0.27× (2025). FCF: USD 1.3 B (2021) → USD 3.5 B (2022) → −USD 0.2 B (2025, Adaro Green capex phase). At 9.2 % ROIC post-restructuring, ADRO is near cost of capital: value creation is thin until clean-energy projects commission and HCC prices recover. HCC averaged USD 230–260/T in 2025 vs. USD 670/T at 2022 Ukraine-shock peak; each USD 10/T move in HCC shifts Kestrel EBIT ~USD 60–80 M.
Post-AADI, Kestrel (Queensland, ~8 Mtpa hard coking coal) anchors revenue: sold at Australian HCC benchmark to global steel mills.
EconomicsFY2025, the first clean post-perimeter year: GM 34.0%, OM 28.0%; met-coal economics without the thermal volume beneath them.
Adaro Green (hydro, solar) and Adaro Minerals (aluminium smelting) absorb the capex line: $0.18bn→$0.80bn/yr across the window.
EconomicsOCF $0.59bn vs capex $0.80bn (FY2025): the build is running AHEAD of the cash engine that funds it.
The AADI spin-off moved the thermal business out (FY2023–24 statements carry the disposal accounting); ADRO retains minority economics only.
EconomicsThe ESG re-rating thesis in exchange for the cash cow: the trade the FY2025 numbers now have to justify.
Cost structureStrip-ratio and logistics dominate cash costs at Kestrel; the consolidated margin now moves with the HCC benchmark almost one-for-one: a purer, more volatile cost-price spread than the old blended group.
Cash cycleCommodity-standard: short receivables against benchmark-priced cargoes; the real cycle is price; FY2022’s $3.86bn OCF and FY2025’s $0.59bn are the same machine at different points of the same curve.
Kestrel owns its orebody (acquired freehold). Mining inputs (explosives, diesel, equipment) are commodity inputs from multiple suppliers. Australian mining workforce is unionised but Kestrel's long-run economics sustain the relationship. No meaningful supplier concentration risk.
Implication → Low input-side risk. Fixed cost structure amplifies commodity price cycles: the leverage cuts both ways (supercycle upside vs. downturn stress).
HCC and ICI-2 thermal coal are exchange-priced benchmarks: ADRO is a pure price-taker in all segments. Steel mills (Nippon Steel, POSCO, ArcelorMittal, Tata Steel) have multiple met coal supply alternatives (BHP Mitsubishi Alliance, Glencore, Anglo, Teck). No pricing power.
Implication → Revenue is entirely commodity-cycle driven. Cost efficiency at Kestrel is the only operational lever ADRO controls. The 2022 supercycle (HCC USD 670/T) will likely not repeat at same magnitude.
New met coal mines require massive capital (Kestrel acquisition AUD ~2.3 B), multi-year permitting, and scarce high-quality coking coal geology (limited to Queensland, Canada, Russia). Indonesian thermal coal (AADI) faces IUP/PKP2B approval barriers and DMO obligations. Adaro Green hydropower sites are long-permitted: renewable entrants need different sites.
Implication → Hard coking coal supply is structurally constrained: Kestrel is a scarce, long-life (100 Mt reserves = 12+ yr) asset. This supports HCC price floors relative to thermal.
Met coal: no near-term substitute for blast furnace steelmaking (~70 % of global steel). EAF/DRI displacement is a 2030–2040 horizon risk. Thermal coal (AADI stake): high substitution risk as renewables become cost-competitive with coal-fired power by ~2030 in many markets. ADRO's pivot to met coal is specifically designed to exit the high-substitution thermal segment.
Implication → The Kestrel + Adaro Green strategy is correctly positioned. Met coal runway is 2030–2035 before EAF pressure becomes structural. The AADI thermal stake is the residual ESG liability.
Met coal: BHP Mitsubishi Alliance, Glencore, Anglo American, Teck Resources, Peabody compete globally. ADRO Kestrel (~8 Mtpa) is mid-sized. Thermal (AADI): domestic PTBA + seaborne competition from Russia, Australia, South Africa at ICI-2 benchmark. Adaro Green renewables: compete against PLN internal generation and other IPP developers (foreign + domestic) for PLN PPA allocation.
Implication → Kestrel cash cost position vs. the HCC price floor is the sole competitive variable. ADRO must keep Kestrel below the cycle trough cost to avoid cash-negative operations in future downturns.
Two of five years are NOT comparable: FY2023–24 net margins of 76.9%/66.4% are AADI disposal accounting, not operations; the narrative has said so since authoring, and no model on this site uses those margins (the cyclical normalization is why no ADRO DCF figure is cited in the house view). The honest read: FY2025 NM 23.9% on the new perimeter, against FY2021’s 23.4% on the old one.
| Period | One-off item | Impact |
|---|---|---|
| FY2023–FY2024 | AADI spin-off disposal gains dominate reported net income across two fiscal years | NM 76.9%/66.4% vs the ~24% operating norm on either side; equity also carries the distribution: $6.5bn→$5.0bn is the spin-off leaving, not losses. |
Cash conversionOn the clean years conversion is commodity-normal (OCF ≈ 1.3x NI FY2025); the FY2023–24 prints divide meaningless NI by real cash: skip them.
The boldest reallocation in the coal cohort: spun the thermal cash cow out to shareholders, kept the met-coal + green build, and paid dividends ABOVE current earnings (FY2025 payout ~110% per the price snapshot) while capex runs at $0.8bn; three commitments the $0.59bn OCF cannot fund simultaneously. Either coking prices recover, the dividend adjusts, or leverage returns. ROIC 9.2% vs a ~10.6% USD WACC says the new perimeter is not yet earning its keep: the FY2026 record decides the verdict.
DeploymentFY2021→25: the AADI distribution (the thermal business itself; the largest single deployment), cumulative capex ~$2.8bn into Kestrel/green/minerals, dividends throughout; equity $4.5bn→$5.0bn across a perimeter that shrank by a whole company.
Returns trendClean-year ROIC: 22.1% (FY2021) → 39.0% (FY2022 supercycle) → 9.2% (FY2025 new perimeter); the current print sits AT the cost of capital. The green assets’ returns arrive on PPA schedules years out; until then the record shows a builder paying harvester dividends.
FY2025: payout ~110%, OCF $0.59bn vs capex $0.80bn; the distribution is funded by the balance sheet, not the year. Sustainable only if coking prices turn.
FY2023–24 statements mix restated IS with consolidated BS (disclosed since authoring); every trend metric crossing FY2023 needs the perimeter footnote.
Kestrel is now the revenue anchor: one mine, one commodity, one benchmark; the old portfolio effect left with AADI.
9.2% vs ~10.6% WACC on the first clean year: the transformation has not yet demonstrated value creation on the retained perimeter.
Curated narrative (educational interpretation), backed by the linked sources. The figures above are deterministic. Not investment advice.
Indonesia controls >60 % of global nickel supply and is the world's largest thermal-coal exporter; hilirisasi mandates in-country ore processing, reshaping value chains from raw ore to battery-grade products.