Adani Highlights Growth Without External Debt
Gautam Adani's conglomerate released the financial and credit credentials of its portfolio companies to the investors, a robust reflection of healthy profits and cash flows that can sustain growth without dependence on external debt.
The ports-to-energy conglomerate, which has been marred by an indictment in a US court against the founder chairman Adani and two other executives on charges of bribing Indian officials to get solar power contracts, in a presentation to investors presented its consistently expanding profits and cash flows, which, over a period, had led to lowering dependence on debt for its growth ambitions.
It now creates close to two-thirds of the overall assets, as opposed to five years ago. The group in the last six months invested close to Rs 75,227 crores against a total debt increase of merely Rs 16,882 crores.
A note was also shared with the investors, along with the presentation.
According to the note, an outline of the liquidity position of the group said, "Adani portfolio companies have adequate liquidity to satisfy all debt servicing obligations for at least 12 months. Adani portfolio companies held a cash of Rs 53,024 crore as of September 30, 2024, which is approximately 21 per cent of its gross debt outstanding".
This amount was enough to cover the next 28 months of debt servicing requirement, it said.
The group had earlier announced it would invest more than Rs 8 lakh crore (USD 100 billion) in the next 10 years across its portfolio companies.
Fund Flows from Operations (FFO) or cash profits stood at Rs 58,908 crore for the past 12 months and grew at over 30 per cent during the last five years. On this basis, even after assuming no growth, the group will be able to invest Rs 5.9 lakh crore only from its internal cash accruals over the next 10 years, leaving very little dependency on external debt.
Further, at the portfolio level, there is very low debt gearing of 2.46x -- which means it has massive headroom for debt, according to the presentation.
Other highlights from the presentation included EBITDA (earnings before interest tax and depreciation) for the past 12 months, which it said was highly stable and, hence, predictable due to its infrastructure projects, grew by 17 percent to Rs 83,440 crore.
Existing annual cash flows alone can pay the entire debt in three years.
Gross assets or investments rose by Rs 75,227 crore against a total debt increase of only Rs 16,882 crore. The asset base has now increased to Rs 5.5 lakh crore.
Average cost of borrowing is at 8.2 per cent, the lowest in five years, due to upgrades in ratings across group companies, it said.
The Rs 94,400 crore domestic banks long-term debt of the Adani Group stands against a cash balance of Rs 53,024 crore-mostly parked with Indian banks.
Borrowings from global banks constitute 27 percent of total debt.
