Adani Group's Credit Profile Sees Sharp Rise As Debt Declines Steadily
Cash reserves of Adani portfolio companies are at the highest levels ever at Rs 59,791 crore.
The Adani Group's net debt to Ebitda ratio has consistently declined over the last five years, leading to an improvement in credit profile even as the conglomerate's operating profit soared.
The group's net debt for the first time is below 2.5 times its Ebitda — at 2.19 times in FY24, according to an investor presentation. This, despite a series of global headwinds in the last five starting from the Covid-19 pandemic to the Russia–Ukraine war to a short seller-triggered event and the Middle East conflict.
Moreover, 24.77% of gross debt is in form of cash balances providing liquidity cover of over 30 months of debt servicing. For the first time, equity deployed in assets is now above 60% and stands at 62%.
Cash reserves of Adani portfolio companies are at the highest levels ever at Rs 59,791 crore. Net debt in FY24 stood at Rs 1.81 lakh crore.
"Significant debt, around 62% of total term debt, of portfolio is in the leverage ratio range of 0x – 2.5x. Maturity profile exceeds cover period in all cases ensuring the refinancing protection," the presentation said.
The credit profile has improved from 54% rated above 'A+' in April 2019 to 89% rated above 'A+' in April 2024.
Adani Ports and SEZ Ltd. has gone from 'AA+' to 'AAA' in the period, while Adani Power Ltd. went seven notches up from 'BB+' to 'AA-'.
Debt Mix Profile
The Adani Group has a diversified debt capital book with balanced exposure to domestic banking, global banking and capital markets.
Domestic banks have a 36% share in the conglomerate's debt profile (Rs 75,877 crore) with an average maturity of 9 years, as of financial year ending March 31, 2024. Foreign banks and overseas capital markets have an exposure of 26% and 29%, respectively.
The challenges the group overcame last year have strengthened its resolve, and they draw inspiration from the very resilience that India embodies, Billionaire chairman Gautam Adani said in an annual report last week, adding that a two-pronged attack by the US-based short-seller, Hindenburg Research, targeted the group on the financial and political fronts, which led to a multi-dimensional crisis.
The road ahead is paved with extraordinary possibilities, and the chairman promised that the Adani Group today is stronger than it has ever been.
On Friday, Adani Group stocks added as much as Rs 1.23 lakh crore in investor wealth, taking their total market capitalisation to Rs 17.94 lakh crore intraday.
The group's presentation also highlighted that the listed entities trade at a NIFTY 50 multiple of 20.3 times, compared to the benchmark's 19.2 times. The portfolio has also demonstrated superior Ebitda growth, outperforming both domestic and global indices.